The latest class action lawsuit in the UK brought by retailers seeks financial compensation for the company’s alleged historical practices. “The most obvious and major impact is the loss of revenue and profits. “Amazon is taking away sales from sellers because it could have used competitor data to market its own products,” said Boris Bronfentrinker, a partner at the law firm Willkie Farr & Gallagher and counsel for the plaintiffs. “When companies gain market power, they must act with some responsibility. It’s not free and open for them to do whatever they want.”
However, despite numerous existing investigations and allegations along similar lines, retailers face obstacles. Bronfentrinker says the case is “nailed” because the commitments made to the EC and CMA effectively amount to an admission by Amazon that it has breached competition law: “The smoking gun is the equivalent of them admitting that they will stop doing it,” he says. But in practice, says Kathryn McMahon, a law professor at the University of Warwick, retailers will have to build a case from scratch because no formal infringement by Amazon has yet been recorded. “The whole point of making a commitment is that you don’t have to admit it,” he says.
Therefore, retailers will first have to establish that Amazon dominates the UK market, which the company is likely to deny, McMahon says, and then prove that Amazon has abused that position in a way that has harmed sellers on its platform. “This is the most difficult point,” he says.
The argument that Amazon abused its dominant position rests on a little-tested principle of competition law: self-preference. The idea is that vast digital platforms should not be allowed to abuse their power in a particular market – say, e-commerce – in order to expand other areas of their business at the expense of potential competitors. In 2017, the EU found Google violated its antitrust laws by following its own preferences and, in particular, by exploiting its dominance in the advertising industry to prominently feature its own shopping services. Great Britain in May introduce new rules built to prevent harm caused by self-indulgence. However, there is restricted precedent on which the Amazon plaintiffs can build their argument. “Self-preference has only gained popularity as a theory of harm in the last ten years,” says Niamh Dunne, associate professor of law at the London School of Economics. “It’s an area still up for grabs.”
In the absence of extensive legal precedent, the case will depend to some extent on the interpretation of the difference between sound business strategy and anticompetitive self-indulgence. Amazon operating an online marketplace, using it to sell its own products and delivering goods through its own logistics services is not illegal in itself, even if this could give it a competitive advantage. “One of the complications with preference is that vertically integrated organizations do it all the time. This may have negative effects on competition, but it is also a natural thing for companies, says Dunne. Amazon can therefore confidently argue that it was simply following the “law of the jungle,” he says.
Before such arguments come to fruition, the retailers’ lawsuit must first be approved by the UK’s Competition Appeal Tribunal, which is not expected to issue a decision on whether to hear the case until early next year.
Sellers happily await their day in court. “If this class action strengthens the changes recommended by the European Commission and the CMA, and companies like Amazon realize they cannot treat partners this way, then we have achieved something,” says Goodacre. “[Amazon is] quite a greedy company. I say this with reluctant admiration. But it comes at a price for someone.