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In a significant legal development, Amazon is facing a new competition lawsuit in the U.K., with the latest claim, filed on Thursday, demanding over £2.7 billion in damages (approximately $3.4 billion at current exchange rates) before the U.K.’s Competition Appeals Tribunal. This lawsuit has drawn attention to ongoing concerns about competition, consumer choice, and the power of major tech companies in the digital economy.
Background
The lawsuit has been initiated by the UK’s Competition and Markets Authority (CMA), which is tasked with ensuring fair competition in the marketplace. The allegations center on claims that Amazon has engaged in practices that stifle competition and harm both consumers and smaller businesses.
Moreover, lawsuit is being led by Andreas Stephan, a competition law professor and head of the Law School at the University of East Anglia. He is representing over 200,000 U.K.-based third-party sellers on Amazon, who are involved in the case.
The lawsuit contends that Amazon has misused its dominant position in providing marketplace services to U.K. third-party sellers. Allegations include favoring its own retail products over those of third-party sellers, giving preferential treatment to its logistics services (Fulfilled by Amazon, or FBA), and unfairly requiring sellers to use FBA for access to its Prime membership program.
The claim further asserts that Amazon disrupts competition across platforms by making it more difficult for third-party sellers to offer lower prices on competing sites.
Key Allegations
- Preferential Treatment: The lawsuit states in a press release that these alleged abuses have led to third-party sellers experiencing lost sales, higher costs, and increased fees paid to Amazon for its services—costs that, it argues, would have been lower under fair competitive conditions.
- Data Exploitation: The CMA alleges that Amazon may be using data from third-party sellers to inform its own product development and pricing strategies, further consolidating its market power and disadvantaging competitors.
- Consumer Harm: The primary concern is that these practices might reduce consumer choices, ultimately leading to increased prices and a decline in product quality over the long term.
Potential Consequences
These accusations echo ongoing investigations by regional competition authorities into Amazon’s practices, particularly regarding its use of third-party data and its management of marketplace components like FBA and Prime. Similar antitrust charges have been filed against Amazon in the U.S. over recent years, highlighting a global scrutiny of the company’s competitive practices.
As an opt-out collective action, the U.K. lawsuit automatically includes eligible sellers unless they choose to withdraw. There are no costs for sellers to participate, and if the claim succeeds, all sellers who have not opted out will be eligible for a share of any compensation or settlement.
Eligibility for the lawsuit includes any U.K.-based individual or business that used a professional account to sell to U.K. consumers on Amazon between June 2018 and June 2024. Additional details about the case, along with a form to register for updates, are available on the claim’s official website.
The lawsuit is financed by Innsworth Capital Limited, a prominent litigation funder supporting several other opt-out collective actions against tech giants in the U.K. and Europe, such as a $3.1 billion competition claim against Meta and privacy litigation against Oracle and Salesforce.
If the lawsuit proceeds and Amazon is found guilty of anti-competitive behavior, the consequences could be significant. Then it will cover all case-related costs and, in return, will receive a portion of any compensation awarded or any settlement payment that Amazon might agree to. Additionally, the ruling could prompt Amazon to change its business practices, impacting how it operates not just in the UK, but potentially in other markets as well.
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Amazon’s Response
Amazon was approached for a comment regarding the U.K. lawsuit. A spokesperson for the company responded via email, stating, “We are confident these claims are baseless and that this will be revealed through the legal process. Over 100,000 small and medium-sized businesses in the UK sell on Amazon’s store; independent selling partners account for more than half of all physical product sales on our UK platform. The reality is that our success depends on the success of the businesses we work with.”
Conclusion
The £2.7 billion lawsuit against Amazon emphasizes persistent concerns regarding market dominance and competition in the digital era. This isn’t the first class-action-style lawsuit Amazon has faced in the U.K. over competition abuse claims. Earlier this month, the British Independent Retailers Association filed a similar damages suit on behalf of its thousands of members, seeking £1.1 billion in compensation.
In recent years, the U.S. e-commerce giant has also faced competition abuse accusations domestically. In September, the Federal Trade Commission, along with attorneys general from 17 states, filed a lawsuit against Amazon, claiming it employed various monopolistic tactics to unlawfully suppress competition.
Back in May 2021, Washington, DC’s attorney general also filed a suit, accusing Amazon of restricting competition by controlling third-party sellers, including practices like price fixing and preventing them from offering lower prices elsewhere.
Amazon resolved EU antitrust investigations in December 2022 without facing financial penalties, agreeing instead to adjust its marketplace practices. A similar settlement was reached with the U.K.’s Competition and Markets Authority last November, also without a financial penalty.
While antitrust fines penalize companies, they don’t offer direct relief to victims of unfair practices. This gap creates opportunities for damages claims, allowing litigation funders to play a role.
As both consumers and businesses anticipate the outcome, this lawsuit highlights the crucial need for maintaining fair competition in a rapidly evolving digital economy. Stay tuned for further developments as this case progresses through the legal system.
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