Apple and Amazon UK claim

Apple and Amazon face collusion allegations in a UK tribunal case brought on behalf of millions of UK consumers who allegedly overpaid for Apple and Beats products.

The collective action

The action seeks compensation for the millions of UK consumers it says were impacted by a secret deal between the global corporations, which saw Amazon restricting sales of Apple products by independent retailers on its marketplace. In return, Apple offered Amazon preferential wholesale prices on all its products sold directly to customers via Amazon’s own retail business.

The claim alleges that, as a result of a deal struck by Apple and Amazon in October 2018, by January 2019 almost all independent retailers of Apple products were forced off the Amazon marketplace. This led to a decrease in the discounts offered to customers by the limited number of independent merchants remaining, and a significant increase in the sales of Apple products at undiscounted prices. 

The continuing effect of this deal is to keep the prices of Apple products, including iPhones, iPads and MacBooks, artificially high for the benefit of Apple, and at the expense of millions of UK consumers. Amazon also benefits, as it can now sell more Apple products at higher margins directly to consumers. 

The claim concerning purchases made on Amazon (the “On-Amazon claim”) is estimated to be worth around £300 million, including projected losses through to the anticipated trial.

The action is led by Justin Le Patourel, a former Ofcom consumer policy lead, and the certified class representative in the BT landline overcharging case. Mr Le Patourel is acting through JLP A&A Class Representative Limited.

Justin Le Patourel, the proposed class representative in the action, said:

“Millions of UK consumers rely on Apple and Amazon for their tech products, unaware that the two companies may have been secretly colluding to make them pay more and reduce their choice. Big businesses should compete fairly, not strike secret deals that leave customers out of pocket.

Apple and Amazon are two of the five largest companies in the world by market value. These gigantic businesses have misused their power to shut out competition from independent merchants – unlawfully lining their wallets at the expense of UK consumers. It’s a betrayal of their customers’ trust.

I’m delighted to be leading this new claim on behalf of UK consumers. The merits of the case have always been strong. The Tribunal’s earlier refusal to certify the previous claim had nothing to do with the core allegations, which remain compelling and unanswered”. 

The Tribunal’s decision

Under the UK’s collective proceedings regime, a proposed class representative must obtain the Tribunal’s approval before taking a claim forward on behalf of a class. In this case, the Tribunal accepted that the On-Amazon claim advanced a plausible theory of harm and that the proposed economic methodologies provided a credible blueprint for assessing losses at trial.

The Tribunal rejected Apple and Amazon’s challenges to Mr Le Patourel’s suitability to lead the proceedings. It also rejected their argument that the On-Amazon claim should not proceed on cost-benefit grounds if the wider claim concerning purchases from the Apple Store and other retailers was not certified (the “Off-Amazon claim”).

In assessing the benefits to consumers, the Tribunal gave weight to the proposed use of direct payments or account credits to distribute compensation. This could enable a high proportion of affected consumers to receive compensation even where individual payments are relatively modest. The Tribunal also granted permission to amend the claim to seek an injunction aimed at bringing Apple and Amazon’s alleged continuing infringement to an end.

The Tribunal declined to certify the Off-Amazon element of the claim at this stage because it considered the proposed economic methodology insufficient. It did not, however, determine that losses outside Amazon could not arise, and rejected the defendants’ arguments for striking out that claim or disposing of it by summary judgment.

What happens next?

Certification of the On-Amazon claim is subject to changes to the funding, insurance and legal fee arrangements to exclude recovery of costs associated with the earlier proceedings brought by Christine Riefa, and to Mr Le Patourel’s remuneration being set at £170 per hour, subject to a £750 daily cap.

The relevant stakeholders have agreed to the required changes, and Mr Le Patourel has accepted the revised remuneration terms. These arrangements are now being documented to satisfy both conditions and enable the CPO to be made shortly.

Specialist team

Hausfeld is a leading disputes-only law firm specialising in competition law, with significant expertise in all aspects of collective redress and group claims, including litigation against Big Tech and other large corporates. The firm pioneered the Trucks Cartel litigation in the UK, Germany and the Netherlands and has acted on some of the most complex damages claims of the last decade, including: in Kent v Apple, the first collective action to be successful at trial; on the “Interchange Fee” litigation against Visa and Mastercard; against six financial institutions over their participation in unlawful price-fixing of the foreign exchange currency markets; and against Google, Apple, Amazon and Qualcomm in relation to alleged anti-competitive behaviour in a wide range of abuse of dominance actions. For more information about Hausfeld’s collective redress practice, see here.

Further information

Affected consumers, on whose behalf the class action will be 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.