Amazon third-party sellers to receive fairer exposure from online retailers

Tech giant and one of the world's leading online retailers, Amazon, is offering to move forward with new commitments to allow third-party sellers on its British Marketplace platform to be treated the same as its own retail company.

Amazon is hoping to make matters right with the Competition and Markets Authority (CMA), who began an investigation into the retailer last July regarding concerns with competition.

The investigation was opened as the CMA suspected that Amazon may have infringed the Chapter II prohibition of the Competition Act 1998 (CA98). This particular prohibition forbids a company in a dominant and leading position from dictating the British trade landscape through one or more undertakings.

The CMA was worried that Amazon was unfairly showcasing its own business more so than the competitors and Amazon third-party sellers which were using its British Marketplace. Also, the regulator was concerned that Amazon was potentially being more favourable to sellers that were utilising the company's own delivery services and warehouse facilities.

Amazon Marketplace is its e-commerce platform which includes the display of the 'Buy Box' feature on the pages of products and services which customers are looking to purchase. This is where customers are able to view the buying options of Amazon's own offers or ones from Amazon third-party sellers.

Amazon's British sector is extremely valuable to the organisation as Statista reports that net sales in Britain crossed over $30 billion in 2021 and 2022, which has placed Britain as the second biggest European market for the retailer. It makes it crucial for Amazon's British operations to iron out any potential issues and avoid any misconduct as that would cause disruption for Amazon's British base.

The proposed commitments from Amazon include not obtaining data from third-party sellers and competitors which would typically hand the organisation a competitive advantage over any other outside sellers.

The need to address this specific matter was off the back of major concerns that Amazon was using the commercially sensitive data of its competitors to influence the commercial handling of its own products, including deciding what to sell, managing the stock levels of certain products and pricing decisions.

Also, the proposals put forward by Amazon are for all offers for an item on the Amazon Marketplace to receive equal coverage in the Buy Box section. The concern here came from Amazon supposedly not promoting third-party offers for a product as much as its own retailer or if third-party offers were being strongly promoted, it would be from companies using Amazon's delivery services.

Another one of the commitments presented by Amazon was that it would let the third parties using its Marketplace service negotiate directly with independent Amazon Prime delivery service providers. This would ensure there are delivery fee benefits for customers, as the costs would be reduced by better rates being set from the direct negotiations.

Additionally, Amazon will appoint an independent trustee to oversee whether and how the organisation complies with the commitments it has put forward. To make sure the trustee is reliable and skilled enough to monitor Amazon's operations, the CMA will have direct input into who is inevitably selected for the role.

The CMA's Senior Director for Enforcement, Ann Pope, has assured everyone that the commitments advocated by Amazon will lead to more fairness in the company's British Marketplace.

She clarified: "Amazon's commitments to the CMA will help ensure that third-party sellers on Amazon Marketplace can compete on a level-playing field against Amazon's own retail business and, ultimately, mean that customers in the UK get a better deal."

The CMA are satisfied with the proposals by Amazon in eliminating the concerns previously brought up. The regulator is therefore moving ahead with discussions and consultations to decide if it will sign off officially on the commitments, with the consultation period beginning right away and running until 1st September 2023.

The upside to approving Amazon's commitments is that the year-long investigation into its alleged unfair promotion of competitors and Amazon third-party sellers would no longer need to keep on running and the CMA could turn its attention to other concerns. By the CMA accepting the commitments, Amazon would not have to await its fate on whether it infringed the CA98.

Amazon has also been sorting out other matters with the CMA recently, as the tech organisation managed to get approval from the competition regulator for its acquisition of American tech company, iRobot. The CMA found that Amazon would not reduce the level of competition in the British smart home industry.