Amazon Faces $1 Billion UK Lawsuit, Allegedly Favouring Own Products

Amazon is facing a legal claim in the United Kingdom that is seeking estimated damages of £900 million ($1 billion) for Amazon customers in the UK.

The legal claim has been dubbed the ‘UK Buy Box Claim‘, which alleges that Amazon breached competition law and caused millions of UK customers to pay higher prices for products sold on Amazon.co.uk and the Amazon mobile app by obscuring better-value deals.

Essentially the claim to be filed at London’s Competition Appeal Tribunal (CAT), .centres around the allegation that Amazon harmed customers by directing to its ‘feature offer’, with better-value deals being hidden and consumers paying more for products.

Buy Box

When a customer shops on Amazon, they will have seen the ‘Add to Basket’ and ‘Buy now’ buttons which appear in what is known as the “Buy Box” at the top right-hand corner of the product page on Amazon.co.uk, and at the bottom of the screen on the Amazon app.

More than 80 percent of Amazon sales are made via the Buy Box, but the legal claim contends that the Buy Box does not always present the best deal.

Amazon allegedly uses its control over access to the Buy Box, and allegedly uses a secretive and self-favouring algorithm which favours Amazon’s own products or products sold by a seller that uses Amazon’s order fulfilment services, to direct customers to purchase certain products despite better deals on the same product being available.

The collective action has been brought by consumer rights advocate Julie Hunter plans on behalf of British consumers who have made purchases on Amazon since October 2016.

Hunter is being represented by law firm Hausfeld.

The claim accuses Amazon of breaching section 18 of the UK Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union.

Amazon tricks?

“Nine out of ten shoppers in the UK have used Amazon, according to surveys, and two thirds use it at least once a month,” said Julie Hunter. “Like countless millions of people in the UK, I often use Amazon for the convenience it offers.”

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“Many consumers believe that Amazon offers good choice and value, but instead it uses tricks of design to manipulate consumer choice and direct customers towards the featured offer in its Buy Box,” said Hunter.

“Far from being a recommendation based on price or quality, the Buy Box favours products sold by Amazon itself, or by retailers who pay Amazon for handling their logistics,” said Hunter. “Other sellers, however good their offers might be, are effectively shut out – relegated down-page, or hidden several clicks away in an obscure corner of Amazon’s website.”

“Amazon occupies an incredibly powerful position in the market, making it impossible for consumers to take individual action,” said Hunter. “Amazon shouldn’t be allowed to set the rules in its favour and treat consumers unfairly. That is why I am bringing this action.”

The case follows the announcement by Britain’s antitrust watchdog (Competition and Markets Authority or CMA) in July that it is investigating Amazon over suspected breaches of competition law, including how it selects which products are placed within the “Buy Box” feature.

The CMA probe comes as Amazon is facing two ongoing investigation of its business practices by the European Commission.

Last December Italy’s antitrust watchdog levelled a punishing 1.13 billion euros ($1.28 billion) fine against the e-commerce giant, alleging that it had harmed competing operators in the e-commerce logistics service.

Amazon strongly disagreed and has appealed the Italian fine.

Amazon response

And there is no surprise that Amazon disagrees with the latest legal claim, which it said was “without merit”

“This claim is without merit and we’re confident that will become clear through the legal process,” an Amazon spokesperson was quoted as saying by Reuters in a statement.