The British Independent Retailers Association (BIRA), representing thousands of independent retailers, announced a substantial damages claim against Amazon, valued at £1.1 billion ($1.3 billion).
The claim alleges that Amazon has unlawfully exploited its members’ proprietary data to enhance its own competitive edge.
BIRA also targets Amazon’s “Buy Box” mechanism, accusing the company of manipulating which retailers are selected for the prime placement.
The Buy Box, where options like “Buy Now” and “Add to Basket” appear, often features items sold by multiple retailers.
Amazon uses a proprietary algorithm to determine which retailer gets the purchase, a process that BIRA claims is unfairly skewed in Amazon’s favor.
BIRA’s legal team describes the claim as the largest collective action ever launched by retailers in the UK.
The complaint, set to be filed at the Competition Appeal Tribunal in London, spans from October 2015 to the present, coinciding with the 2015 amendment to the UK’s Competition Act, which introduced class action suits.
This case underscores the tension facing online retailers: while they might prefer direct consumer sales, they can’t afford to overlook Amazon’s market dominance. Retailers pay a hefty 30% commission to Amazon on every item sold through its platform.
“One might wonder why an independent retailer would use Amazon if it is so detrimental to their business,” said Andrew Goodacre, CEO of BIRA.
“In reality, consumer buying habits have shifted significantly, and Amazon is the dominant online marketplace in the UK For small retailers with limited resources, Amazon is the starting point for online trading.
“While they were aware of Amazon’s high commissions, they were unaware of the risk that their trading data could be used by Amazon to undermine their sales.”
Andrew Goodacre
The case is linked to a 2022 probe by the Competition and Markets Authority (CMA), investigating whether Amazon was abusing its market position to favor its own retail operations over third-party sellers.
This investigation looked into whether Amazon accessed sensitive commercial data from retailers to inform its pricing strategies and how it selects sellers for the Buy Box.
Retailers Take Legal Stand Against Amazon
Although Amazon reached a settlement with the CMA, including the appointment of a monitoring trustee, avoiding a full investigation, regulatory scrutiny is far from over. A similar case is currently unfolding in Europe.
This latest class action represents an opportunity for retailers to voice their grievances and seek compensation. BIRA plans to present 1,150 pages of evidence in court.
“This claim is exactly why the new collective action regime was established, allowing small and medium-sized businesses to seek justice against a vast multinational entity,” said Boris Bronfentrinker, a partner at Willkie Farr & Gallagher, the law firm representing the retailers.
“Amazon’s unrivaled power in the online marketplace has led to significant damage and financial loss for retailers by misusing their confidential data and prioritizing its own operations.
“No individual retailer could challenge Amazon alone, but BIRA has shown it will stand up for UK retailers, backed by a major litigation funder and a top-notch advisory team. UK retailers deserve fair treatment from Amazon, and this claim aims to recover the damages they have suffered.”
Boris Bronfentrinker
In 2023, Amazon reported $270 billion in gross profits. The UK remains its largest international market, with revenues of $33.6 billion out of a global total of $575 billion.
This high-stakes legal battle will test Amazon’s business practices and the extent of its influence over the online retail market, setting a precedent for how major tech companies interact with smaller businesses in the digital age.
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