Tech

Amazon investigated by UK antitrust watchdog over its marketplace practices

Key Points
  • The U.K.'s Competition and Markets Authority said it is probing Amazon over practices affecting sellers on its domestic marketplace that "may be anti-competitive and could result in a worse deal for customers."
  • Amazon said it will "work closely" with the CMA during the probe.
  • The CMA is investigating three areas including 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.

In this article

An Amazon warehouse in Warrington, England.
Nathan Stirk | Getty Images

The U.K.'s antitrust regulator on Wednesday said it is investigating Amazon over whether the U.S. e-commerce giant is hurting competition by giving an unfair advantage to its own retail business and sellers that use its services over third-party merchants on its marketplace.

Britain's Competition and Markets Authority said it was probing Amazon over practices affecting sellers on its U.K. marketplace that "may be anti-competitive and could result in a worse deal for customers."

Amazon sells products via the marketplace through its own retail business. But it also allows third-party merchants to sell items too. Amazon provides services to these sellers such as help with logistics or matching merchants to 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 is in relation 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 Basket." The CMA will be looking at how Amazon sets the criteria for suppliers to be the preferred or first choice in the "Buy Box".

Finally, the British authority will be looking at how Amazon sets the eligibility criteria for selling under the Prime label. Prime is Amazon's paid-for subscription program that gives customers fast delivery and access to other products.

"Thousands of UK businesses use Amazon to sell their products and it is important they are able to operate in a competitive market. Any loss of competition is a loss to consumers and could lead to them paying more for products, being offered lower quality items or having less choice," Sarah Cardell, general counsel at the CMA, said in a statement.

The CMA said it has not reached any conclusions yet as to whether or not competition law has been infringed.

Amazon said it will "work closely" with the CMA during the probe.

"We will work closely with the CMA during their investigation, although we believe we've always worked hard to help small businesses selling on Amazon to succeed, which is in both their and our best interests," a spokesperson told CNBC.

The spokesperson said more than 50% of all products sold on Amazon are from small businesses and sales from its merchant partners "continue to grow faster than Amazon's retail sales."

The U.K. watchdog's probe follows a similar ongoing investigation by the European Commission, the European Union's executive arm.