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Amazon classified as grocery retailer in the UK

Amazon
Amazon faces tougher regulation as UK competition watchdog classes it grocery retailer. Photo: Leon Neal/Getty Images

US tech giant, Amazon (AMZN) will face tougher regulation in the UK after the Competition and Markets Authority (CMA) said on Wednesday it had classed the company as a grocery retailer.

The watchdog's designation means Amazon will have to comply with rules that ensure that other grocery chains like Tesco (TSCO.L), Sainsbury's (SBRY.L) treat their suppliers fairly.

Some rules restrict firms from making changes to supply contracts at short notice, requiring them to give an appropriate period of notice if they no longer want to use a supplier.

The CMA says it monitors companies to see if they're complying with the code of practice, which applies to retailers with an annual turnover of over £1bn ($1.4bn) from grocery sales.

"Amazon.com, Inc’s (Amazon) increasing activity in the UK groceries’ sector in recent years has led the CMA to designate the company under the Groceries Market Investigation Order, the watchdog said.

Watch: Inside the UK's first Amazon Fresh store

Adam Land, senior director, remedies, business and financial analysis at the CMA, said: "Households across the UK are increasingly using Amazon to buy food and other essential items. Today’s decision to designate Amazon helps to ensure a level playing field for companies active in the groceries sector as people’s buying habits evolve.

"These rules mean that the thousands of companies supplying Amazon with groceries are now protected from potential unfair business practices."

Amazon said it has invested £32bn in the UK since 2010. It continued expansion in 2021, opening its first 17 physical stores in the UK – 15 Amazon Fresh food stores in London, and two Amazon four-star retail stores in London and Kent.

UK supermarket, Morrisons is a key supplier and partner of Amazon, and has been since 2016. The grocer currently sells ranges via Amazon Prime and Amazon’s bricks and mortar stores in London.

Graph: Yahoo Finance
Graph: Yahoo Finance

Read more: Facebook-owner Meta fined by UK competition watchdog for second time

It comes after the tech giant further cemented its expansion into the UK market.

The company's streaming service Amazon Prime announced it signed a multi-million-pound deal to take production space at Shepperton Studios in Surrey as it prepares for its new Lord of the Rings TV series.

Amazon up new facilities at the studios consisting of nine sound stages, workshops and office accommodation spreading across roughly 450,000 square feet.

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