Legal action filed following Apple and Amazon’s secret deal on marketplace access

Alleged ongoing collusion between Apple and Amazon is revealed in a new collective action filed in the UK Competition Appeal Tribunal on 25 July 2023. The legal action has been filed on behalf of millions of UK consumers by Professor Christine Riefa, a consumer law expert who teaches at the University of Reading, who is represented by Hausfeld.

The collective action seeks at least £500m for UK consumers impacted by a secret deal between the global corporations, which saw Amazon restricting sales of popular Apple products by independent merchants on its popular marketplace. In return, Apple offered Amazon preferential wholesale prices on all Apple and Beats products, which it could sell directly to customers via its own retail business.

The claim

The claim alleges that by January 2019, almost all independent merchants of Apple and Beats products disappeared from the Amazon marketplace as a result of Apple and Amazon’s collusion. This led to a decrease in the discounts provided to customers by the limited number of independent merchants remaining, and a significant increase in the sales of Apple and Beats products at undiscounted prices.

This deal was struck in October 2018, and its continuing effect is to keep the prices of Apple and Beats products, including iPhones, iPads and MacBooks, artificially high for the benefit of Apple and at the expense of UK consumers. Amazon also benefited, as the deal enabled it to sell more Apple and Beats products at higher prices directly to consumers.

Because of the market power enjoyed by the two Tech giants, and the drastic reduction of discounted offerings on Amazon’s platform, more than 7 million British customers have paid (and continue to pay) higher prices for Apple and Beats products when purchasing them from Amazon. The claim estimates that the compensation owed to these customers is almost £500 million. The claim also alleges that a further 29 million British customers have paid higher prices for Apple and Beats products when purchasing them from other retailers (e.g., Apple, Curry’s, etc.) either online or in-store, with total compensation for such customers to be quantified in due course.

The case against Apple and Amazon

The claim alleges that Apple and Amazon have breached competition law by entering into and implementing unlawful anticompetitive agreements on 31 October 2018, which restricted third parties from reselling Apple and Beats products on Amazon’s marketplace. As a result of these agreements, customers paid (and continue to pay) higher prices for Apple and Beats products when purchasing them from Apple, Amazon or other retailers.

Christine Riefa, the proposed class representative in the action, said:

“Millions of consumers in the UK enjoy the services and products of Apple and Amazon. They do not suspect that those companies collude to make them pay more for their electronics and reduce their choice. I believe that big businesses like Apple and Amazon should behave fairly and compete on merits, not by using underhand tactics.

Each company has an effective stranglehold over its market, and they are misusing that advantage to shut out competition from independent merchants – unlawfully lining their wallets at the expense of consumers. It’s a betrayal of their customers’ loyalty.

At a time when families are under huge financial pressure from high inflation, mortgage and energy costs, it is more important than ever for consumers to be treated fairly. I decided to bring the claim because consumers individually would never have been able to and the two Tech giants would have continued to line their pockets with their unlawful behaviours going unchecked.”

Wessen Jazrawi, Partner at Hausfeld, who is leading the litigation, said:

“Apple and Amazon have worked together to exclude competitors on the Amazon platform and to reduce the availability of discounted products, at their customers’ expense. We look forward to working with Christine Riefa to return money to those who have lost out and to making these companies accountable for their unlawful conduct.”

The claim is assisted by information and economic analysis contained in a decision dated 16 November 2021 by the Italian competition authority (Autorità Garante della Concurrenza e del Mercato), which found that Apple and Amazon had entered into and implemented unlawful agreements in breach of EU competition law, and further reference may also be made to the analysis in the Spanish competition authority’s decision of 18 July 2023, which made similar findings. The evidential record resulting from the Italian competition authority’s decision is a significant source of information about the unlawful agreements between Apple and Amazon and their widespread impact on competition not only in the UK but also several other countries. Whilst the Italian competition authority’s decision was subsequently overturned on appeal on 1 June 2022, the appeal succeeded on purely procedural grounds, without any criticism of the decision’s factual or economic findings. For a copy of the Italian competition authority’s decision and its English translation, please visit www.ukappleamazonclaim.co.uk.

Who is eligible

Any consumer in the UK who purchased new Apple or Beats products since October 2018 is an eligible member of the claimant class. In accordance with Competition Appeal Tribunal Rules, the collective action is being filed on behalf of all potential claimants. The claim is brought on an opt-out basis whereby all UK class members are included by default unless they decide to opt-out. To find out more information on this claim please visit www.ukappleamazonclaim.co.uk.

All Apple and Beats electronic products are included within the claim, including: iPhones; iPads; iMacs; MacBooks; Apple TVs; HomePods; Apple Watches; iPods; AirPods; EarPods; Beats wired and wireless headphones and earphones; and ancillary devices such as chargers, keyboards, mouses etc. Purchases of Apple and Beats products as part of mobile network operator contracts are not included.

About the proposed class representative

Professor Christine Riefa is a Professor of Law at the University of Reading and an established academic in the field of consumer protection law and policy. She has an extensive background in researching and promoting effective consumer law enforcement within digital markets, including its intersection with competition law. She serves on the United Nations Working Group on Consumer Protection in E-Commerce.

The proposed class representative has instructed law firm Hausfeld & Co. LLP to represent it in the claim, as well as barristers Thomas de la Mare KC, Tom Coates (both of Blackstone Chambers) and David Went (Exchange Chambers). She is also advised by expert economist Dr Chris Pike (Fideres Partners LLP).

Affected consumers, on whose behalf the class action is brought, will not pay costs or fees to participate in this legal action, which is being funded by a commercial litigation funder.

To learn more about the claim, please visit www.ukappleamazonclaim.co.uk.