The Memo: Small retailers take on Amazon in class action suit

Small, independent British retailers have just filed a massive class action lawsuit against online giant Amazon. 35,000 sellers have alleged that Amazon has been unfairly manipulating the market to their disadvantage. Specifically, they areaccusing the website of using their non-public data to create its own, similar products at cheaper prices and directing buyers to its own products instead of those posted by independent sellers. The £1 billion collective damages claim, submitted to the Competition Appeals Tribunal (CAT) in London, is the largest yet made under the Competition Act 1998. The claim will cover any incidents from 2015 to the present day and is led by the British Independent Retailers Association. 

So, what is a class action and what is the Competition Act 1998? In a class action suit, individuals band together to bring a claim against a party that they believe has wronged them all in the same or similar ways. This allows claims which might not be economically viable on an individual basis to have their day in court. In the UK, the Competition Act 1998 prohibits anti-competitive agreements between businesses and the abuse of a dominant position in the market. The penalty for breaking this law can be up to 10% of the company’s global turnover.  

Amazon already charges sellers a 30% commission fee on every sale on its site. This high selling fee, combined with the alleged manipulation of the market and unfair data usage, could push Amazon’s rivals out of the market, giving the business even greater dominance than it already has. But, given their suspicion of Amazon’s practices, why don’t sellers post their items elsewhere? Well, when the retailer is already the go-to destination for a large portion of online shoppers, many sellers feel they have no choice but to be on Amazon’s platform, despite their questions over whether the website is truly complying with competition law.