Amazon.com Inc (NASDAQ:AMZN) could be forced to pay £900mln in compensation after a collective action lawsuit was brought that alleges the online shopping giant breached UK competition law by favouring its own products.
The lawsuit, which is headed by consumer rights advocate Julie Hunter, is due to be filed to the Competition Appeal Tribunal this month and includes anyone who made a purchase online or on the Amazon app since October 2016.
The claim will allege that the Big Tech firm abuses its status as the dominant online marketplace and harms customers through channelling them towards its 'Buy Box'. Hunter’s team is set to argue this feature nearly always shows goods sold directly by Amazon itself, or by third-party retailers who pay hefty storage and delivery fees to Amazon, CityAM reported. Around 85% of consumers use the 'Buy Box' when purchasing products from the firm it is estimated, the report said.
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“Online shoppers have a right to be treated fairly and to be able to make informed decisions. This lack of transparency and manipulation of choice is an abuse of consumers’ trust, as well as a raid on their wallets,” Hunter told CityAM. “Amazon occupies an incredibly powerful position in the market, making it impossible for consumers to take individual action. Amazon shouldn’t be allowed to set the rules in its favour and treat consumers unfairly”.
The European Commission is also pursuing a formal antitrust investigation, which is looking at similar alleged “self-preferencing” by the US firm. The European body is currently evaluating commitments offered by Amazon to address these concerns.
The key difference with the UK action, CityAM said, is that the goal is to get compensation for the affected parties, rather than imposing a fine or influencing a wider piece of regulation across the region.
An Amazon spokesperson told CityAM: “This claim is without merit and we’re confident that will become clear through the legal process. Amazon has always focused on supporting the 85,000 businesses that sell their products on our UK store, and more than half of all physical product sales on our UK store are from independent selling partners. We always work to feature offers that provide customers with low prices and fast delivery.”
UK firm Litigation Capital Management Ltd (AIM:LIT) (LCM), which specialises in dispute financing solutions internationally, said today that it has agreed to fund the Hunter claim.
In a statement, Patrick Moloney, CEO of LCM, commented: "We are pleased to enter into this new litigation finance agreement, which represents another important step as we grow our position as a leader in disputes funding in the UK market."
Contact the author at jon.hopkins@proactiveinvestors.com