Sellers might be pleased with the news of the CMA investigating Amazon over concerns that practices affecting sellers on its UK Marketplace may be anti-competitive and could result in a worse deal for customers.
The CMA investigation will consider whether Amazon has a dominant position in the UK and whether it is abusing that position and distorting competition by giving an unfair advantage to its own retail business or sellers that use its services, compared to other third-party sellers on the Amazon UK Marketplace.
CMA investigating Amazon in 3 key areas
- How Amazon collects and uses third-party seller data, including whether this gives Amazon an unfair advantage in relation to business decisions made by its retail arm.
- How Amazon sets criteria for allocation of suppliers to be the preferred/first choice in the ‘Buy Box’. The Buy Box is displayed prominently on Amazon’s product pages and provides customers with one-click options to ‘Buy Now’ or ‘Add to Basket’ in relation to items from a specific seller.
- How Amazon sets the eligibility criteria for selling under the Prime label. Offers under the Prime label are eligible for certain benefits, such as free and fast delivery, that are only available to Prime users under Amazon’s Prime loyalty programme.
Will this please sellers?
Some sellers will be very happy with Amazon promoting their products – if you use FBA or qualify for Seller Fulfilled Prime and are winning the Buy Box and see the sales machine rolling in orders for you all may be good in your world. On the other hand, if your items don’t qualify for Prime and you’re either not wining the Buy Box (or are removed from it as soon as a buyer clicks the ‘Prime’ button so that they get free expedited delivery), you’re probably not loving Amazon quite as much.
All retailers who have built their own brand will have heard stories of Amazon bringing out similar products, and even through Amazon say they don’t use internal data to decide what to sell themselves, and rely on publicly available data, the rumours raise their head every time a retailer sees an Amazon own brand start selling something that looks close to their product but usually at a lower price point.
The CMA has not reached any conclusions at this stage as to whether or not competition law has been infringed. The European Commission has previously opened 2 investigations covering the same areas. The CMA will seek to liaise with the European Commission as its own investigation in the UK progresses.
Reactions to CMA investigating Amazon
Thousands of UK businesses use Amazon to sell their products and it is important they are able to operate in a competitive market. Any loss of competition is a loss to consumers and could lead to them paying more for products, being offered lower quality items or having less choice.
A formal investigation will allow us to consider this matter properly.
Sarah Cardell, General Counsel, CMA
As you can imagine, Amazon’s competitors are keen to differentiate their marketplace practices from Amazon and emphasise that they don’t compete with their sellers.
Any online marketplace that uses third-party seller data to gain an advantage over onsite retailers or favour certain sellers is, by definition, creating an unfair and unequal business environment. “This is not the way the industry should operate.
Online marketplaces should be a place where retailers and consumers come together. There is no reason why, when operated correctly, marketplaces should not offer shoppers a good deal – and sellers a lucrative platform to trade on.
Any business practices that actively attempt to promote the opposite by distorting competition should be condemned. That’s because when competition is limited, it’s the consumers that lose out. This results in prices for products going up and, in many cases, consumers having less choice, therefore access to a lower quality of product than might otherwise be available.
As of today, Amazon is subject to an investigation, so it would be wrong to denounce any of their practices at this stage. However, we have faith that the CMA will do its job and get to the bottom of whatever wrongdoing, if any, was committed.
– Cas Paton, founder and managing director, OnBuy
2 Responses
Amazons current business practices are a clear violation of antitrust principles between themselves and their marketplace sellers.
The Amazon retail division should have to sell on the Amazon marketplace under the same terms and conditions as other third party sellers.
This includes paying the same fees for the marketplace divisions services as third party sellers do.
This would require regulation governing marketplaces over a certain size to create legal separation between their retail operations and their marketplace operations. This should also include stopping the marketplace division from sharing data with the retail division that is not also accessible to third party sellers.
Similar to how banks investment division need to be separated off from their commercial division to prevent the investment division making
huge profits betting against financial products they knew were junk but were flogging to their customers anyway as happened leading up to the financial crisis.
A clear abuse of power! We sell the same products on other market places and our adverts are “hidden” if the best offer (lowest price) is not on Amazon. This doesn’t take into account their higher selling fees or any other costs associated with selling on Amazon.