E-commerce giant Amazon faces legal action for unlawfully favouring its own product offers
A new collective claim - UK Buy Box Claim - alleges that Amazon has breached UK and EU competition law directing users of its website and app to offers that benefit Amazon while concealing offers that may be better for consumers. By promoting the offers more favourable to Amazon and excluding other sellers, who may be offering the same product cheaper or on better terms, customers are enticed to pay more than they need to and more restricted in choice.
Julie Hunter, a longstanding advocate of consumer rights, is seeking to represent the interests of tens of millions of Amazon users in the opt-out collective action, expected to be filed in the Competition Appeal Tribunal in London soon.
The case against Amazon
The claim will accuse Amazon of breaching section 18 of the UK Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union.
The e-commerce giant is accused of unlawfully abusing its dominant position by placing in the Buy Box those offers that benefit Amazon while obscuring better-value deals. Potential purchasers are steered towards the “Featured Offer” in the Buy Box which is the only offer considered and selected by the vast majority of users, many of whom trust Amazon and wrongly assume it is the best deal.
According to the claim, the Buy Box on Amazon’s website and mobile app uses a self-favouring algorithm which is systematically biased to favour goods sold by Amazon as part of its retail business and/or by third-party sellers who use Amazon’s order fulfilment and delivery services.
This effectively prevents millions of consumers from navigating the site to find cheaper offers or better delivery options for the same product. Other would-be sellers are nearly always excluded from the Buy Box, stifling their ability to offer consumers a better deal, and leaving consumers out of pocket.
Such manipulation of consumers is a breach of Amazon’s obligation not to distort competition as the dominant marketplace. The claim will seek damages from Amazon estimated in the region of £900 million.
Who is eligible
Anyone who lives in the UK and made purchases on Amazon.co.uk or on the Amazon app since October 2016 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 without them needing to actively opt in to the claim.
About the class representative
Julie Hunter is an independent consultant who for more than 20 years has worked with leading domestic and international consumer organisations, including Which?, on topics such as consumer vulnerability, digital services, consumer rights, customer service and complaints. Ms Hunter is Chair of the Consumer & Public Interest Network, an independent organisation representing consumers in the development of voluntary standards, supported by the UK standards body BSI.
The proposed class representative in the action, Julie Hunter, said:
“Nine out of ten shoppers in the UK have used Amazon, according to surveys, and two thirds use it at least once a month. Like countless millions of people in the UK, I often use Amazon for the convenience it offers."
“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. 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. 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."
“Online shoppers have a right to be treated fairly and to be able to make informed decisions. This lack of transparency and manipulation of choice is an abuse of consumers’ trust, as well as a raid on their wallets. Amazon occupies an incredibly powerful position in the market, making it impossible for consumers to take individual action. Amazon shouldn’t be allowed to set the rules in its favour and treat consumers unfairly. That is why I am bringing this action.”
Lesley Hannah, one of the Hausfeld partners leading the litigation, said:
“Most consumers use the Buy Box when purchasing products on Amazon – estimates range from 82% to 90%. This means that millions of consumers have paid too much and been denied choice. This action seeks fair redress for them.
“Amazon takes advantage of consumers’ well-known tendency to focus on prominently-placed and eye-catching displays, such as the Buy Box. Amazon doesn’t present consumers with a fair range of choices – on the contrary, the design of the Buy Box makes it difficult for consumers to locate and purchase better or cheaper options. Amazon should not be allowed to take advantage of its customers in this anticompetitive way.”
“Competition laws are there to protect everyone. They ensure that individuals can make genuine and informed choices, and are not simply led into making selections which benefit the companies they interact with. Fairness is at the heart of competition law and consumers are not being treated fairly by Amazon.”
Affected Amazon users, 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 LCM Finance, a global litigation funder.
Ms Hunter is represented by Anna Morfey, Lesley Hannah and Aqeel Kadri of Hausfeld & Co LLP who have instructed Marie Demetriou KC, Robert O’Donoghue KC and Sarah Love of Brick Court Chambers.
To learn more about Ms Hunter’s claim, please visit www.ukbuyboxclaim.com.
Investigations and regulatory decisions
The European Commission is pursuing two formal antitrust investigations into Amazon. One of these, initiated in November 2020, is evaluating the same alleged “self-preferencing” by Amazon as is claimed in the UK claim. The Commission’s preliminary finding was that the rules and criteria for the Buy Box unduly favour Amazon's own retail business, as well as marketplace sellers that use Amazon's logistics and delivery services. The Commission is currently evaluating commitments offered by Amazon to address these concerns.
In July 2022, the Competition and Markets Authority (CMA) announced that it was investigating Amazon’s business practices, including how it sets the criteria for selection of the featured offer. The CMA indicated that its investigation followed on from that conducted by the Commission.
In December 2021, Italy’s competition regulator concluded that Amazon had abused its dominant position by making certain benefits to third-party retailers conditional on their purchasing of its logistics service.
In the United States, the House Judiciary Subcommittee on Antitrust concluded that Amazon’s online retail dominance gives it monopoly power over third-party sellers on its US marketplace and that it effectively precludes retailers who have not purchased its logistics services from “winning the Buy Box”.
Conal Walsh / Will Matthews / Andreas Grueter