British shop owners launch £1billion damages claim against Amazon | Personal Finance | Finance

Briain’s small shops have launched a £1 billion damages claim against Amazon in the ultimate David versus Goliath battle for the future of thousands of struggling stores.

The lawsuit is being led by the British Independent Retailers Association (BIRA) and is on behalf of thousands of retailers who sell on Amazon’s UK marketplace.

It alleges the global web retailer has been illegally misusing their data and manipulating the Amazon Buy Box to benefit its own commercial operation and its overall revenues and profit.

Amazon’s annual global gross profit for 2023 was $270.046bn [£211.46bn], a 19.94 percent increase from 2022.

The claim, the biggest collective action ever launched by UK retailers, is due to be heard by the Competition Appeal Tribunal (CAT) in London.

The basis of the claim is that the private information that belonged to the small retailers was used by Amazon to decide whether it would begin to offer its own products in profitable and growing sectors.

As a result it was able to effectively piggyback on the efforts of small retailers and grab their sales by launching competing products.

The retailers say the tactic ‘meant Amazon knew it could successfully enter and take away profits from UK retailers.

The retailers, many of whom are small independent UK businesses, were unaware that Amazon was allegedly illegally using their data to benefit its own retail operation.

A spokesman for the claimants said: “Amazon was already charging them a non-negotiable 30 percent commission on every product sold on the site.

“By misusing their proprietary data to bring to market rival products that are sold cheaper, Amazon is effectively pushing many of the UK’s independent retailers out of the market.

“The consequences of Amazon’s abusive conduct has been to inflate its profits and harm the UK retail sector, especially the smaller independent retailers who are struggling at a time of difficult economic circumstances.”

Amazon has long challenged the suggestion that it misuses the information it collects from the marketplace’s third-party retailers.

In 2022 the UK Competition and Markets Authority (CMA) opened a probe into Amazon alleging it was abusing its dominant market position by giving an unfair advantage to its own retail business and retailers that use its services over other third-party retailers on its marketplace.

The UK is Amazon’s biggest European market. The CMA raised concerns that Amazon’s access to ‘commercially sensitive data’ relating to third-party retailers could give it an advantage in deciding which products to sell and how to set prices.

The competition watchdog also alleged that products sold by third-party retailers were less likely to appear in the ‘Buy Box’ than Amazon’s own products, reinforcing the anticompetitive effect.

In order to avoid a full investigation and detailed decision from the CMA about its conduct, Amazon offered a number of commitments to halt these practices.

It also agreed to appoint an independent trustee, approved by the CMA, to monitor the company’s compliance with its commitments going forward. There has been a similar investigation by the European Commission which yielded similar concessions from Amazon.

Today’s filing of a collective action, which mirrors America class actions, against Amazon will – in theory – allow UK retailers to access justice as a group and receive compensation for the losses they have incurred.

Based on expert analysis of the evidence, the total damage caused to UK retailers is estimated to be in the region of £1.1bn including interest.

BIRA’s Chief Executive Andrew Goodacre said: “One might ask why would an independent retailer use Amazon if it is so damaging to their business?

“In reality, we have seen a significant shift in consumer buying behaviour and, if small business want to sell online, Amazon is the dominant marketplace in the UK. As a result, for small retailers with limited resources, Amazon is the marketplace to start online trading.

“Whilst the retailers knew about the large commissions charged by Amazon, they did not know about the added risk of their trading data being used by Amazon to take sales away from them.”

He added: “The British public has a strong relationship with its local, independent retailers and ensuring they are not put out of business by Amazon’s illegal actions is a key driving force behind this collective action.

“The filing of the claim today is the first step towards retailers obtaining compensation for what Amazon has done. I am confident that the CAT will authorise the claim to go forward, and I look forward to the opportunity to present the case on behalf of UK retailers. This is a watershed moment for UK retailers, but especially for small independent retailers in this country.”

BIRA has instructed leading international law firm Willkie Farr & Gallagher (UK) LLP on this landmark case. Their team is being led by partners Boris Bronfentrinker, Elaine Whiteford and Michelle Clark.

Mr Bronfentrinker said: “This is precisely the sort of claim that the new collective action regime was brought in for, to enable small and medium size businesses to be able to recover damages caused to them by a huge multinational, where they would not otherwise have such access to justice.

“The power of Amazon is unrivalled when it comes to the very important online world to which so much commerce has migrated. Making itself a must use for retailers, Amazon has then proceeded to cause damage and financial loss to retailers by misusing their confidential data that Amazon was entrusted to keep safe and by preferencing its own retail operations.

“No individual retailer, no matter how large, is willing to get into the lion’s den and take the fight to Amazon, but fortunately BIRA has shown that it will stand up and fight for UK retailers, backed with the financial muscle of one of the world’s largest litigation funders, and with a first-class team of advisors.

“Retailers in the UK were entitled to be treated better and fairly by Amazon. They were not, and this claim will deliver back to them the more than a billion pounds in damages that has been caused to them.”

Amazon said it is confident that the case bought by BIRA “is baseless and that this will be exposed in the legal process”. 

It added: “Over 100,000 small and medium sized businesses in the UK sell on Amazon’s store, more than half of all physical product sales on our UK store are from independent selling partners, and the fact is that we only succeed when the businesses we work with succeed.”

Source link