The latest UK class action lawsuit filed by retailers seeks financial compensation for the company’s past practices. “The most obvious and primary impact is loss of revenue and profits. Amazon has been able to use competitors’ data to bring its own products to market, but it has taken sales away from retailers,” argues Boris Bronfentrinker, a partner at Willkie Farr & Gallagher and counsel for the plaintiffs. “When a company gains market power, it has to act with certain responsibilities. It’s not a free pass to do whatever it wants.”
But despite numerous existing investigations and complaints along similar lines, the retailer faces hurdles. Bronfentrinker argues that the case is “conclusive” because the undertakings to the EC and CMA are effectively an admission by Amazon that it has violated competition law. “The smoking gun is that Amazon itself has admitted that it will stop violating,” he says. But in reality, says Catherine McMahon, an associate professor of law at the University of Warwick, the retailer must build its case from scratch because no formal violations by Amazon have yet been recorded. “The biggest benefit of making undertakings is that it’s not an admission,” she says.
So retailers would first have to prove that Amazon has a dominance in the UK market, which McMahon said Amazon is likely to dispute, and then prove that Amazon has abused that position to the detriment of sellers on its platform. “That’s where it gets tricky,” McMahon said.
The case that Amazon abused its dominant position is based on a little-tested principle of competition law: primacy. The idea is that large digital platforms should not be allowed to abuse their strength in a particular market (e.g. e-commerce) to develop other areas of their business at the expense of potential rivals. In 2017, the EU found that Google violated antitrust law by primacy, specifically by using its dominant position in the advertising business to prominently position its shopping service. In May, the UK introduced new rules to prevent primacy damages. But there is limited precedent for plaintiffs in the Amazon case to advance their claims. “The primacy theory has only come to prominence in the last decade or so as a theory of damages,” says Niamh Dunne, an associate professor of law at the London School of Economics. “It’s still a somewhat murky area.”
Lacking a wealth of legal precedent, the case will hinge in part on interpreting the difference between smart business strategy and anticompetitive self-preferencing. While it’s not illegal for Amazon to operate an online marketplace and use it to sell its own products and deliver them through its own logistics services, doing so could give it a competitive advantage. “One of the tricky things about self-preferencing is that vertically integrated organizations do it all the time. It can have a negative impact on competitors, but it’s also just natural for companies,” Dunn says. So Amazon may have room to argue it’s simply following the “law of the jungle,” he says.
Before any such arguments can take place, the retailers’ case must first be certified by the UK’s Competition Appeal Tribunal, which is not expected to decide whether the case can continue until early next year.
Retailers are content to wait for their day in court. “If this class action enforces the changes recommended by the European Commission and the CMA, and companies like Amazon realise they can’t treat their partners like this, then we will have achieved something,” Goodacre says. “They’re a pretty greedy company, and I say that with a bit of reluctant admiration, but it’s coming at a cost to somebody.”
