The latest class action lawsuit in the United Kingdom, filed by retailers, seeks financial compensation for the company’s alleged historical practices. “The most obvious and primary effect is a loss of revenue and profits. “Amazon is taking sales away from merchants because it has been able to use competitor data to bring its own products to market,” says Boris Bronfentrinker, partner at the law firm Willkie Farr & Gallagher and attorney for the plaintiffs. “When companies acquire market power, they have to act with a certain responsibility. “It is not free or open for them to do whatever they want.”
But despite numerous existing investigations and accusations pointing to a similar line, retailers face obstacles. Bronfentrinker affirms that the case is “concrete”, because the commitments made before the EC and the CMA effectively amount to an acknowledgment by Amazon that it violated competition law: “The irrefutable proof is their own admission that they are going to stop to do it.” he says. But in practice, says Kathryn McMahon, associate professor of law at the University of Warwick, retailers will have to build a case from scratch, because no formal breach by Amazon has been recorded so far. “The great advantage of making commitments is that there is no admission,” she says.
Retailers will therefore first have to establish that Amazon is dominant in the UK market – something the company will likely contest, says McMahon – and then prove that Amazon abused that position in a way that caused harm to sellers in your platform. “That’s the tricky point,” he says.
The case that Amazon abused its dominance rests on a little-tested principle of competition law: self-preference. The idea is that large digital platforms should not be allowed to abuse their strength in a particular market (for example, e-commerce) to advance other areas of their businesses at the expense of potential competitors. In 2017, the EU found Google had violated its antitrust law by adopting its own preferences, specifically by using its dominance in the advertising business to give prominence to its own shopping services. In May, the United Kingdom set new rules Built to prevent damage caused by self-preference. But there is little precedent around which the plaintiffs in the Amazon case can build their argument. “Self-preference has only come to prominence as a theory of harm in the last ten years,” says Niamh Dunne, associate professor of law at the London School of Economics. “It’s an area still somewhat up for grabs.”
In the absence of abundant legal precedent, the case will depend to some extent on the interpretation of the difference between sound business strategy and anti-competitive self-preference. It is not illegal in itself for Amazon to run an online marketplace, use it to sell its own products, and deliver the products through its own fulfillment service, although doing so could give it a competitive advantage. “One of the complications of self-preference is that vertically integrated organizations do it all the time. It can have negative effects for competitors, but it is also very natural for companies,” says Dunne. So Amazon could argue that it has simply been following “the law of the jungle,” she says.
Before these types of arguments can be developed, the retailers’ claim must be certified by the UK Competition Appeal Tribunal, which is not expected to make a decision on whether the case can continue until early next year.
Retailers are content to wait for their day in court. “If this class action reinforces the changes recommended by the European Commission and the CMA, and companies like Amazon realize that they cannot treat their partners in this way, then we will have achieved something,” says Goodacre. “(Amazon is) a pretty greedy company. I say this with grudging admiration. But for someone it has a cost.”