Amazon faces investigation by UK competition watchdog

The Competition and Markets Authority (CMA) has launched a new investigation into Amazon over concerns the company’s practices on its UK marketplace may be anti-competitive.

The probe follows an existing European Commission investigation over similar concerns.

The UK regulator will determine whether Amazon is abusing its dominant position in the UK 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.

Some items on Amazon’s marketplace are supplied via its own retail business, but a large proportion are supplied by third-party sellers.

Amazon provides services to these sellers, including those that are essential to make sales, such as matching sellers with consumers.

The business also offers optional services that incur additional fees, like Amazon’s ‘Fulfilment by Amazon’ service, which handles some aspects of the sales process, including storage, packaging, and delivery.

“Millions of people across the UK rely on Amazon’s services for fast delivery of all types of products at the click of a button,” said Sarah Cardell, general counsel, CMA. “This is an important area so it’s right that we carefully investigate whether Amazon is using third-party data to give an unfair boost to its own retail business and whether it favours sellers who use its logistics and delivery services – both of which could weaken competition.”

The investigation will explore 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.

It will also look at how the retail giant 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.

Finally, the CMA will investigate how the company 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.

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