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UK competition watchdog opens investigation into Amazon

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·Finance Reporter, Yahoo Finance UK
·3-min read
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A parcel moves on the conveyor belt at Amazon's logistics centre in Graben near Augsburg December 16, 2013. Workers at Amazon.com's German operations were set to go on strike on Monday, in the middle of the crucial Christmas holiday season, in a dispute over pay that has been raging for months. The Verdi union said workers would strike in Amazon's logistic centres in Bad Hersfeld and Leipzig and, for the first time, in Graben. REUTERS/Michaela Rehle (GERMANY - Tags: BUSINESS EMPLOYMENT)
The Competition and Markets Authority has launched an investigation into whether Amazon has a dominant position in the UK. Photo: Michaela Rehle/Reuters

Amazon (AMZN) is being investigated by the UK's competition watchdog over concerns that some of its practices may be anticompetitive and result in a worse deal for customers.

The Competition and Markets Authority's (CMA) probe will explore whether the US giant is giving an unfair advantage to its own retail business or sellers that use its services, compared to other third-party sellers on the Amazon UK Marketplace.

Read more: Amazon to deliver by bike and on foot in London for first time

The CMA will also scrutinise how Amazon selects the preferred choice in the "Buy Box", which is displayed prominently on Amazon's product pages and provides customers with one-click options to "Buy Now" or "Add to Basket" from a specific seller.

Some of the products on Amazon’s Marketplace are supplied through its own retail business. However, a large proportion are supplied by third-party sellers.

Amazon provides services to these sellers, including those that are essential to make sales, such as matching sellers with consumers. It also offers optional services that incur additional fees, such as Amazon’s ‘Fulfilment by Amazon’ service. This handles some aspects of the sales process, including storage, packaging, and delivery.

The investigation will look at how the tech giant is using third-party seller data and how it decides the criteria for selling under the Prime label.

Sarah Cardell, general counsel at the CMA, said: "Millions of people across the UK rely on Amazon's services for fast delivery of all types of products at the click of a button.

"This is an important area so it's right that we carefully investigate whether Amazon is using third-party data to give an unfair boost to its own retail business and whether it favours sellers who use its logistics and delivery services – both of which could weaken competition.

Read more: CMA accepts Google's pledge on privacy

"Thousands of UK businesses use Amazon to sell their products and it is important they are able to operate in a competitive market.

The European Commission has previously opened two investigations covering the same areas. The CMA will seek to liaise with the European Commission as its own investigation in the UK progresses.

Rocio Concha, Which? director of policy and advocacy, said: "Amazon is the go-to online retailer and marketplace for millions of people. However, if it is abusing a dominant position then consumers may be having less choice or paying higher prices, so it’s right that the CMA is investigating these concerns and is prepared to take action if required.

"This is the latest in a growing number of investigations into concerns that tech giants may be limiting competition and harming consumers. While welcome, these cases can be slow and UK consumers would be better served by the government giving powers to the Digital Markets Unit so it can introduce and enforce a pro-competition regime for digital markets.”

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