Another antitrust lawsuit is being filed in Europe targeting Big Tech for hefty damages over claims of abusive self-preferencing.
This time ecommerce giant Amazon — and its nudge-tastic ‘Buy Box’ — is in the frame for an incoming opt-out representative legal action that’s been announced in the UK, seeking an estimated £900 million in damages to compensate tens of millions of consumers for alleged anti-competitive behavior.
The key accusation of “The Amazon UK Buy Box Claim” — as the opt-out collective action suit is being styled — is that Amazon uses the Buy Box, a feature it displays on product pages encouraging shoppers to add a particular seller’s item to their cart, to unlawfully favor its own product offers, obscuring better deals that could save shoppers money.
The suit will allege that Amazon uses a “secretive and self-favouring algorithm to ensure the Buy Box nearly always features goods sold directly by Amazon itself, or by third-party retailers who pay hefty storage and delivery fees to Amazon”, per a press release announcing the legal action.
This is a familiar charge, with both the UK’s competition authority (since this summer) and the European Union’s antitrust unit (since 2020) investigating Amazon’s criteria for sellers to feature in the Buy Box, probing concerns it artificially favors both its own retail offers and those of sellers that use its logistics and delivery services.
But the biggest punch to date has been landed by Italy — which fined Amazon ~$1.3BN at the end of last year for abusing its market position through self-preferencing. Its competition watchdog found Amazon abused its position by giving preferential treatment to third-party sellers that use its logistics service — including a higher higher chance of being featured in the Buy Box — than those sellers not paying Amazon to use its logistics service.
The Amazon UK Buy Box Claim — which is slated to be filed in the Competition Appeal Tribunal in London before the end of this month — is being funded by LCM Finance, a global litigation funder.
Consumer rights advocate, Julie Hunter, is putting herself forward as the class representative — seeking to represent the interests of tens of millions of Amazon users that the collective action alleges have been damaged by Amazon’s anti-competitive behavior.
The suit will accuse Amazon of breaching section 18 of the UK Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union.
Commenting in a statement, Hunter said: “Many consumers believe that Amazon offers good choice and value but instead it uses tricks of design to manipulate consumer choice and direct customers towards the featured offer in its Buy Box. Far from being a recommendation based on price or quality, the Buy Box favours products sold by Amazon itself, or by retailers who pay Amazon for handling their logistics. Other sellers, however good their offers might be, are effectively shut out – relegated down-page, or hidden several clicks away in an obscure corner of Amazon’s website.”
“Online shoppers have a right to be treated fairly and to be able to make informed decisions,” she added. “This lack of transparency and manipulation of choice is an abuse of consumers’ trust, as well as a raid on their wallets. 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. That is why I am bringing this action.”
Reached for comment on the legal action, an Amazon spokesperson said:
“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.”
While Italy has definitely thumped Amazon over self-preferencing, there has — more generally — been a widespread failure of traditional competition regulation to respond effectively to Big Tech’s market muscle despite heavily documented concerns.
Hence other antitrust investigations over the same issue are still ongoing — or even only just being opened.
This problem of classic competition regulation’s flat-footedness in the face of Internet-based market power dynamics has, in recent years, nudged a number of European lawmakers to announce a reboot of their rulebooks to bring in proactive regimes they hope will actually be able to clip the wings of the most powerful digital platforms.
Reforms such as the EU’s just adopted Digital Markets Act (which will start operating next year); or Germany’s special abuse controls, which came into force after a 2021 update of domestic competition law (and which, earlier this year, its Federal Cartel Office confirmed apply to Amazon).
However it’s still early days for those ex ante reboots so litigation funders have spotted an enforcement gap they can lean into in the meanwhile.
Hence the flurry of antitrust litigation targeting Big Tech in Europe this year — including, in January, a UK class action style suit against Facebook-owner Meta (which is claiming data exploitation through abuse of dominance and seeking $3BN+ in damages); in February, a PriceRunner lawsuit against Google (seeking $2.4BN+ damages for alleged breaches of the EU’s 2017 Google Shopping antitrust enforcement); and, last month, a couple more suits against Google — filed on behalf of publishers who claim they have been harmed by anti-competitive adtech practices and are reported to be seeking up to $25BN in damages.
It’s too early to say whether any of these legal actions will prevail but the stakes are high — obviously — given the billions in damages being sought.
And the chance of a massive payday is evidently greasing the supply of litigation funders willing to take a punt.
Commenting in another supporting statement, Lesley Hannah, one of the partners at Hausfeld & Co LLP (which is leading the litigation), said: “Most consumers use the Buy Box when purchasing products on Amazon –- estimates range from 82% to 90%. This means that millions of consumers have paid too much and been denied choice. This action seeks fair redress for them.
“Amazon takes advantage of consumers’ well-known tendency to focus on prominently-placed and eye-catching displays, such as the Buy Box. Amazon doesn’t present consumers with a fair range of choices – on the contrary, the design of the Buy Box makes it difficult for consumers to locate and purchase better or cheaper options. Amazon should not be allowed to take advantage of its customers in this anticompetitive way.
“Competition laws are there to protect everyone. They ensure that individuals can make genuine and informed choices, and are not simply led into making selections which benefit the companies they interact with. Fairness is at the heart of competition law and consumers are not being treated fairly by Amazon.”
The UK has — for a few years now — also been trailing a domestic “pro-competition” law reform targeted at tech giants. However legislation to empower a dedicated Digital Markets Unit that was set up within the Competition and Markets Authority last year has been delayed by ongoing domestic political turmoil.
So, when it comes to Big Tech unfairly throwing its weight around, UK citizens still can’t expect speedy relief from regulators — which makes ‘no risk’ collective action lawsuits, in which litigation funders pick up the costs and fees, the next obvious choice.