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ACT parent company Bira leads £1 billion damages claim against Amazon by UK retailers in landmark collective action

Posted on in Business News , Cycles News

A £1 billion damages claim has been filed against Amazon on behalf of retailers selling on Amazon’s UK marketplace for illegally misusing their data and manipulating the Amazon Buy Box to benefit its own commercial operation and its overall revenues and profit.

Bira logo

The claim, the biggest collective action ever launched by UK retailers, is being brought by ACT parent company Bira (British Independent Retailers’ Association) on behalf of retailers at the Competition Appeal Tribunal (CAT) in London. It asserts that between October 2015 and the present date, Amazon used data belonging to UK retailers on the company’s marketplace – data that is non- public and belongs solely and specifically to the retailers – in combination with manipulating the Amazon Buy Box, to engage in a product entry strategy that resulted in sales revenue and profits being diverted from these retailers to Amazon.

Such commercially valuable and confidential information helps Amazon decide whether to enter a new product segment based on its earnings and sales potential, which elements of the product to copy, how to price an item, and which consumers to target. That information in combination with the Buy Box, meant Amazon knew it could successfully enter and take away profits from UK retailers.

The retailers, many of whom are small independent UK businesses, were unaware that Amazon was illegally using their data to benefit its own retail operation. Amazon was already charging them a non-negotiable 30% commission on every product sold on the site. By misusing their proprietary data to bring to market rival products that are sold cheaper, Amazon is effectively pushing many of the UK’s independent retailers out of the market. The consequences of Amazon’s abusive conduct have been to inflate its profits and harm the UK retail sector, especially the smaller independent retailers who are struggling at a time of difficult economic circumstances.

It is the largest collective claim to be filed under the Competition Act 1998 on behalf of UK retailers. The Act was amended in 2015 to enable a collective damages claim to be brought on behalf of a class of people who have suffered loss.

Amazon has long challenged the suggestion that when it makes and sells its own products, it misuses the information it collects from the marketplace’s third-party retailers. It has similarly challenged that it uses the Buy Box to preference its own retail operations.

However, in 2022 the UK Competition and Markets Authority (CMA) opened a probe into Amazon alleging it was abusing its dominant market position by giving an unfair advantage to its own retail business and retailers that use its services over other third-party retailers on its marketplace. The UK is Amazon’s biggest European market. The CMA raised concerns that Amazon’s access to ‘commercially sensitive data’ relating to third-party retailers could give it an advantage in deciding which products to sell and how to set prices.

The competition watchdog also alleged that products sold by third-party retailers were less likely to appear in the ‘Buy Box’ than Amazon’s own products, reinforcing the anticompetitive effect of Amazon’s decisions to take sales away from third-party retailers. Amazon set itself up through these unlawful practices to maximise the profit it would make and, in doing so, it must have known about the damage it would cause to third-party retailers.

To avoid a full investigation and detailed decision from the CMA about its conduct, Amazon offered a number of commitments to halt these practices. It also agreed to appoint an independent trustee, approved by the CMA, to monitor the company’s compliance with its commitments going forward. There has been a similar investigation by the European Commission which yielded similar concessions from Amazon.

Amazon’s annual gross profit for 2023 was $270.046bn [£211.46bn], a 19.94% increase from 2022. Today’s filing of a collective action against Amazon will allow UK retailers to access justice as a group and receive compensation for the losses they have incurred because of Amazon’s unlawful conduct. Based on expert analysis of the evidence, the total damage caused to UK retailers is estimated to be in the region of £1.1bn including interest.

The claim is being brought by the Bira, as the proposed representative of the class of retailers selling on the UK marketplace that have suffered loss. Bira is 'the voice of independent retailers' and their leading trade association in the UK. Bira also chairs the Independent Retailer Confederation (IRC), an informal group of approximately 20 other small retail associations.

Bira's Chief Executive, Andrew Goodacre, has worked hard for several years to strengthen Britain’s independent retailers and the communities they support.

Bira has filed over 1,150 pages of documents with the CAT that set out the claim against Amazon. This includes a statement from Mr Goodacre explaining why Bira is bringing the action and how it will manage the claim on behalf of the proposed class of retailers. There is also a report from a leading independent economic expert that supports the claim and a detailed plan for managing the claim, including how the proposed class of approximately 35,000 UK retailers will be communicated with through a claim website, newspapers, magazines and social media.

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