Amazon under investigation by UK watchdog over its market practices

Amazon warehouse in Warrington, England.

Nathan Stirk | Getty Images

The UK antitrust regulator on Wednesday said it was investigating Amazon whether the US e-commerce giant is hurting competition by giving its own retail business and merchants who use its services an unfair advantage over third-party merchants on its marketplace.

The UK Competition and Markets Authority said it was reviewing Amazon for practices affecting sellers in its UK market that “could be anti-competitive and could result in a worse deal for customers.”

Amazon sells products through the marketplace through its own retail business. But it also allows third party sellers to sell products. Amazon provides these sellers with services such as logistics assistance or matching sellers for customers.

The CMA investigation will focus on three main areas. First, how Amazon collects and uses data from third-party sellers and whether this gives Amazon an unfair advantage when it comes to the decisions it makes in its retail business.

The second is related to the so-called “Shopping Box”, an area on Amazon’s product pages that gives shoppers a one-click “Buy Now” or “Add to Cart” option. The CMA will look at how Amazon sets criteria for vendors to be preferred or first in the “Buy Box”.

Finally, the UK authorities will look at how Amazon sets eligibility criteria for selling under the Prime brand. Prime is Amazon’s paid subscription program that gives customers fast shipping and access to other products.

“Thousands of UK companies use Amazon to sell their products and it is important that they can operate in a competitive market. Any loss of competition is a loss to consumers and could result in them paying more for products, being offered lower quality products or having less choice,” CMA General Counsel Sarah Cardell said in a statement.

The CMA said it has not yet come to any conclusions as to whether competition law has been violated.

Amazon said it will work “closely” with the CMA during the investigation.

“We will be working closely with the CMA during their investigation, although we believe we have always worked hard to help small businesses selling on Amazon succeed, which is in their best interest, as well as ours,” a CNBC spokesperson said.

The spokesperson said that more than 50% of all products sold on Amazon are made by small businesses, and sales from its channel partners “continue to grow faster than Amazon’s retail sales.”

The British observer investigation follows a similar ongoing European Commission investigationexecutive body of the European Union.