On 5 July 2022, the CMA launched an investigation under Chapter II of the Competition Act 1998 into suspected breaches of competition law by Amazon. 

The investigation concerned three conducts which might have taken place from at least January 2021.

Alleged anticompetitive conducts

1. Use of non-public third-party sellers within Amazon’s retail business.

Third-party sellers wishing to sell on the UK Amazon Marketplace must enter into the Amazon Services Europe Business Solutions Agreement (the ‘BSA’) and the Amazon Payments UK User Agreement (the ‘Payments Agreement’). 

Under the BSA and Payments Agreement, third-party sellers must provide specific data to Amazon: information about the products they make available for sale; shipment information, fulfilment, order status and tracking; and anticipated transaction volumes. 

Additionally, Amazon collects other data relating to third-party sellers on its UK Amazon Marketplace, including data relating to the sales of listed products.

2. How Amazon sets criteria by selecting which product offer is placed within the ‘Buy Box’.

Amazon uses a two-step process to determine the Featured Offer. First, Amazon assesses the eligibility of third-party sellers through a qualification process. The second step in selecting the Featured Offer involves using a Featured Merchant Algorithm to choose the Featured Offer based on various filters, including price and delivery speed. Therefore, Prime-eligible offers are more likely to be selected as the Featured Offer than similar offers that are not Prime-eligible.

Having an offer selected as the Featured Offer is important to sellers, as evidence provided by Amazon indicates that over 75% of purchases are made via the Featured Offer.

3. How sellers list products as ‘Prime label’.

For a Prime-eligible offer to carry the Prime label, third-party sellers must either use Amazon’s Fulfilment service or qualify for ‘Seller Fulfilled Prime’ (SFP), where sellers choose to deliver products without Amazon’s infrastructure. However, even third-party sellers wishing to qualify as ‘Seller Fulfilled Prime’ must use carriers selected by Amazon.

During the investigation, Amazon provided evidence to confirm that Prime subscribers were responsible for over 80% of the total sales value in 2021.

The CMA’s Competition concerns

1. Amazon Retail’s use of Non-public Seller Data to compete against third-party sellers

Amazon Retail’s access to Non-public Seller Data gives it an advantage over third-party sellers that compete with Amazon Retail on the UK Amazon Marketplace, as those sellers do not have access to such data. 

The data collected by Amazon provided a competitive advantage to inform various business decisions, including retail offers, purchase prices and terms, stocking, planning inventories of products, and setting product prices.

2. Biases in the Featured Offer selection process

The CMA considered that the process of selecting the ‘Featured Offer’ could involve biases or discrimination in favour of Amazon Retail and/or Sellers using Amazon Fulfilment Services. During the investigation, the CMA found evidence confirming that Amazon Retail was selected as the Featured Offer in more than 80% of cases.  

3. SFP Carrier rates and terms

The CMA was concerned that third-party sellers that chose to sell under the SFP programme were unable to negotiate the terms and rates offered by SFP Carriers, except for Royal Mail, independently of Amazon because Amazon requires SFP Sellers to agree to pre-negotiated rates and commercial terms already agreed between Amazon and the relevant SFP Carriers.

The Commitments

On 26 July 2023, the CMA issued a notice of intention to accept commitments offered by Amazon and invited representations from interested third parties on the proposed commitments. 

Amazon offered the following commitments:

• The Sellers’ Data Commitments. Amazon agreed not use non-public data provided by third-party sellers to Amazon or derived through their use of Amazon’s marketplace services (or related services) for its own retail operations competing with third-party sellers.
• The Buy Box Commitments. Amazon committed to applying objectively verifiable, non-discriminatory conditions and criteria to determine which offer (either from Amazon Retail or third-party sellers) will become the Featured Offer and not use Prime-eligibility or Prime-labelling as relevant criteria for selecting the Featured Offer, referred to as “the Buy Box Commitments”.
• The SFP rates Commitment. Amazon agreed to allow independently negotiated rates between carriers and sellers.

On 03 November 2023, the CMA accepted those commitments, with minor changes suggested by third parties during the consultation process. It is interesting to note that the CMA included a paragraph in its final decision to make clear that, should Amazon be designated as having Strategic Market Status under the forthcoming Competition and Consumers Bill, any new obligation arising from the Bill will be applicable alongside the Commitments accepted in this decision.