October 5, 2022

Amazon warehouse in Warrington, England.

Nathan Stirk | Getty Images

The UK’s antitrust watchdog said on Wednesday it was investigating Amazon over whether the US e-commerce giant was harming competition by giving an unfair advantage to its retail business and sellers using its services over third-party merchants in the market.

Britain’s Competition and Markets Authority said it was investigating Amazon over practices affecting sellers in its UK market that “may be anti-competitive and could lead to a worse deal for customers”.

Amazon sells products across the marketplace through its own retail business. But it also allows outside merchants to sell items as well. Amazon provides services to these sellers such as assisting with logistics or matching merchants with customers.

The CMA’s investigation will focus on three main areas. The first is how Amazon collects and uses third-party seller data and whether this gives Amazon an unfair advantage when it comes to the decisions it makes with its retail business.

The second relates to the so-called “Buy Box,” an area on Amazon’s product pages that gives customers a one-click option to “buy now” or “add to cart.” The CMA will look at how Amazon sets standards for suppliers to be the preferred or first choice in the “buy fund.”

Finally, the British authority will look at how Amazon sets its eligibility criteria to sell under the Prime brand. Prime is Amazon’s paid subscription program that gives customers express delivery and access to other products.

“Thousands of businesses in the UK use Amazon to sell their products and it is important for them to be able to operate in a competitive market. Any loss in competition is a loss for consumers and may result in them paying more for products, offering lower quality items, or offering less quality items or products,” said Sarah Kardle, general counsel for the Markets Authority. Money in a statement, she has fewer options.

The CMA said it had not yet reached any conclusions as to whether or not the competition law had been violated.

Amazon said it would “work closely” with the CMA during the investigation.

“We will work closely with the CMA during the investigation, although we believe we have always worked very hard to help small businesses that sell on Amazon succeed, which is in our best interest and ours,” a CMA spokesperson told CNBC.

The spokesperson said that more than 50% of all products sold on Amazon come from small businesses and that sales from their merchant partners “continue to grow faster than retail sales on Amazon.”

The UK watchdog’s investigation follows an ongoing similar investigation by the European Commission, the EU’s executive arm.

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