Amazon, the owner, and operator of the e-commerce platform Amazon Marketplace, has offered to change how it treats third-party sellers in response to competition concerns raised by the technology giant. In 2019, an estimated 280,000 independent sellers used Marketplace to connect with customers.
Ensuring Fairness for Third-Party Sellers
The CMA launched an investigation in July 2022 after suspecting that Amazon had infringed the Chapter II prohibition of the Competition Act 1998 (CA98), which prohibits one or more undertakings from abusing a dominant position that may affect trade within the UK or part of it.
The CMA believes that accepting these commitments will ensure third-party sellers’ product offers have a fair chance of being prominently displayed to customers in the ‘Buy Box’ (also known as the ‘Offer Display’) on Amazon’s product pages.
The ‘Buy Box’ provides customers with one-click options to ‘Buy Now’ or ‘Add to Basket’ in relation to items from a specific seller.
Addressing Competition Concerns
The CMA’s preliminary view is that Amazon’s offer addresses its competition concerns, and they are now consulting on the commitments they put forward before deciding whether to accept them.
According to Statista, Amazon’s net UK sales amounted to nearly $30 billion in 2022, making the UK its second-largest European market. Formal acceptance of the commitments would result in the CMA not continuing its investigation and not proceeding to a decision on whether the CA98 has been infringed.
The CMA’s decision on accepting binding commitments will not include any statement as to whether or not Amazon’s conduct has infringed the CA98.
Proposed Commitments to Address Concerns
Amazon’s offer includes several commitments to address the CMA’s competition concerns:
- Fair Data Usage: Amazon will not use data obtained from third-party sellers to gain an unfair advantage over other sellers, helping its retail business make important commercial decisions based on third-party sellers’ data.
- Equal ‘Buy Box’ Treatment: Amazon will treat all product offers equally when determining which ones appear in the ‘Buy Box.’ This move addresses concerns that products offered by third-party sellers were less likely to feature in the ‘Buy Box’ than similar offers from either Amazon’s own retail business or third-party sellers using Amazon’s delivery services.
- Independent Negotiation: Third-party businesses using Marketplace can negotiate their rates directly with independent providers of Prime delivery services, potentially leading to lower delivery costs for customers.
- Independent Trustee Oversight: Amazon will appoint an independent trustee responsible for monitoring the company’s compliance with these commitments. The CMA will have a direct say in this appointment, ensuring they have the necessary skills and expertise for the job.
A Step Towards Fair Competition
Ann Pope, Senior Director for Enforcement at the CMA, expressed optimism about Amazon’s commitments, believing they will level the playing field for third-party sellers and ultimately benefit UK customers.
The CMA’s consultation on the proposed commitments will help determine if they adequately address the concerns.
A Path to Timely Changes
The CMA is now consulting on Amazon’s proposed commitments. If they accept them, it would avoid having to pursue a potentially lengthy investigation and lead to earlier changes benefiting businesses and consumers.
At this stage of the investigation, the CMA has not found any infringement of competition law. The consultation is open and will close on 1 September 2023.
Sources: THX News, Cyber Crew & Competition and Markets Authority.
