LONDON--(BUSINESS WIRE)--A ground-breaking new legal claim (“UK Buy Box Claim”) alleges that Amazon has breached competition law and caused millions of UK customers to pay higher prices for products sold on Amazon.co.uk and the Amazon mobile app by obscuring better-value deals.
The opt-out collective action, to be filed in the Competition Appeal Tribunal in London, will allege that the Big Tech company abuses its status as the dominant online marketplace and harms customers by channelling them towards its “featured offer”.
This featured offer – prominently located in the “Buy Box” on Amazon’s website and mobile app – 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.
However, Amazon uses a secretive and self-favouring algorithm to ensure that the Buy Box nearly always features goods sold directly by Amazon itself, or by third-party retailers who pay hefty storage and delivery fees to Amazon, it will be alleged.
The Buy Box is designed and presented in a way that effectively prevents millions of consumers from navigating the site to find cheaper offers, or better delivery options, for the same product, according to the claim.
Such manipulation of consumers is a breach of Amazon’s obligation as the dominant marketplace not to distort competition. The claim will seek damages from Amazon estimated in the region of £900 million.
Julie Hunter, a longstanding advocate of consumer rights, is seeking to represent the interests of tens of millions of Amazon users in the collective action, which is due to be filed before the end of October.
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.
The case against Amazon
The e-commerce giant is accused of unlawfully abusing its dominant position. According to the claim, Amazon steers potential purchasers to products which are not designed to be the best offers for consumers. Rather, the so-called Buy Box offers are systematically biased to favour goods sold by Amazon itself as part of its retail business; and/or by third party sellers who pay to use Amazon’s order fulfilment and delivery services (which are a key source of revenue for Amazon).
Other sellers, who do not pay for Amazon’s fulfilment services, are nearly always excluded from the Buy Box, stifling their ability to offer consumers a better deal, and leaving consumers out of pocket. It will be alleged that Amazon uses the Buy Box feature to manipulate consumer decision-making - directing customers to the product featured prominently in the Buy Box, and thereby obscuring the full range of options available to them, which may be cheaper and/or offer greater value.
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. It coincides with increased concern amongst the public and policymakers about Amazon’s dominant position as both a marketplace and a market participant (see Investigations and regulatory decisions, below).
About the class representative
Julie Hunter has worked exclusively in consumer research, advocacy and protection for more than 20 years. She is an independent consultant who has worked with leading consumer organisations in the UK and abroad on topics such as consumer vulnerability, digital services, financial 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. Ms Hunter is also a member of the Financial Services Consumer Panel (FSCP), an independent statutory body representing consumer interests in the development of UK policy for the regulation of financial services. Earlier in her career, Ms Hunter spent six years leading research projects and investigations at Which?.
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 alleged 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 European Commission.
An investigation by Italy’s competition regulator concluded in December 2021 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”.
Statements
Julie Hunter, the proposed class representative in the action, 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 partners at Hausfeld & Co LLP 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.”
Further information
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, and by 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.
Notes for Editors
About Hausfeld & Co LLP
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 abuse of dominance litigation against Big Tech and other large corporates.
The firm pioneered the Trucks Cartel litigation in the UK, Germany and the Netherlands. It has acted on some of the most complex damages claims of the last decade: on the “Interchange Fee” litigation against Visa and Mastercard, in “Google Shopping” claims on behalf of price comparison websites against Google; against six financial institutions over their participation in unlawful price-fixing of the foreign exchange currency markets; and against Google, Apple and Qualcomm in relation to their alleged abuse of dominance concerning Google Play Store, Apple App Store and the smartphone chip market respectively.
