A ground-breaking new legal claim (“UK Buy Box Claim”) alleges that Amazon has breached competition law and caused millions of UK customers to pay higher prices for products sold on Amazon.co.uk and the Amazon mobile app by obscuring better-value deals.

The opt-out collective action, to be filed in the Competition Appeal Tribunal in London, will allege that the Big Tech company abuses its status as the dominant online marketplace and harms customers by channelling them towards its “featured offer”.

This featured offer – prominently located in the “Buy Box” on Amazon’s website and mobile app – is the only offer considered and selected by the vast majority of users, many of whom trust Amazon and wrongly assume it is the best deal.

However, Amazon uses a secretive and self-favouring algorithm to ensure that 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, it will be alleged.

The Buy Box is designed and presented in a way that effectively prevents millions of consumers from navigating the site to find cheaper offers, or better delivery options, for the same product, according to the claim.

Such manipulation of consumers is a breach of Amazon’s obligation as the dominant marketplace not to distort competition. The claim will seek damages from Amazon estimated in the region of £900 million.

Julie Hunter, a longstanding advocate of consumer rights, is seeking to represent the interests of tens of millions of Amazon users in the collective action, which is due to be filed before the end of October.

Who is eligible

Anyone who lives in the UK and made purchases on Amazon.co.uk or on the Amazon app since October 2016 is an eligible member of the claimant class. In accordance with Competition Appeal Tribunal rules, the collective action is being filed on behalf of all potential claimants without them needing to actively opt in to the claim.

The case against Amazon

The e-commerce giant is accused of unlawfully abusing its dominant position. According to the claim, Amazon steers potential purchasers to products which are not designed to be the best offers for consumers. Rather, the so-called Buy Box offers are systematically biased to favour goods sold by Amazon itself as part of its retail business; and/or by third party sellers who pay to use Amazon’s order fulfilment and delivery services (which are a key source of revenue for Amazon).

Other sellers, who do not pay for Amazon’s fulfilment services, are nearly always excluded from the Buy Box, stifling their ability to offer consumers a better deal, and leaving consumers out of pocket. It will be alleged that Amazon uses the Buy Box feature to manipulate consumer decision-making - directing customers to the product featured prominently in the Buy Box, and thereby obscuring the full range of options available to them, which may be cheaper and/or offer greater value.

The claim 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. It coincides with increased concern amongst the public and policymakers about Amazon’s dominant position as both a marketplace and a market participant (see Investigations and regulatory decisions, below).  

About the class representative

Julie Hunter has worked exclusively in consumer research, advocacy and protection for more than 20 years. She is an independent consultant who has worked with leading consumer organisations in the UK and abroad on topics such as consumer vulnerability, digital services, financial services, consumer rights, customer service and complaints.

Ms Hunter is Chair of the Consumer & Public Interest Network, an independent organisation representing consumers in the development of voluntary standards, supported by the UK standards body BSI. Ms Hunter is also a member of the Financial Services Consumer Panel (FSCP), an independent statutory body representing consumer interests in the development of UK policy for the regulation of financial services. Earlier in her career, Ms Hunter spent six years leading research projects and investigations at Which?.

Investigations and regulatory decisions

The European Commission is pursuing two formal antitrust investigations into Amazon.  One of these, initiated in November 2020, is evaluating the same alleged “self-preferencing” by Amazon as is alleged in the UK claim.  The Commission’s preliminary finding was that the rules and criteria for the Buy Box unduly favour Amazon's own retail business, as well as marketplace sellers that use Amazon's logistics and delivery services. The Commission is currently evaluating commitments offered by Amazon to address these concerns.

In July 2022, the Competition and Markets Authority ("CMA”) announced that it was investigating Amazon’s business practices, including how it sets the criteria for selection of the featured offer.  The CMA indicated that its investigation followed on from that conducted by the European Commission.

An investigation by Italy’s competition regulator concluded in December 2021 that Amazon had abused its dominant position by making certain benefits to third-party retailers conditional on their purchasing of its logistics service.

In the United States, the House Judiciary Subcommittee on Antitrust concluded that Amazon’s online retail dominance gives it monopoly power over third-party sellers on its US marketplace and that it effectively precludes retailers who have not purchased its logistics services from “winning the Buy Box”.

Statements

Julie Hunter, the proposed class representative in the action, said: “Nine out of ten shoppers in the UK have used Amazon, according to surveys, and two thirds use it at least once a month.  Like countless millions of people in the UK, I often use Amazon for the convenience it offers.

“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. 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.”

Lesley Hannah, one of the partners at Hausfeld & Co LLP 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.”

Further information

Affected Amazon users, on whose behalf the class action is brought, will not pay costs or fees to participate in this legal action, which is being funded by LCM Finance, a global litigation funder.

Ms Hunter is represented by Anna Morfey, Lesley Hannah and Aqeel Kadri of Hausfeld & Co LLP, and by Marie Demetriou KC, Robert O’Donoghue KC and Sarah Love of Brick Court Chambers.

To learn more about Ms Hunter’s claim, please visit www.ukbuyboxclaim.com.

About Hausfeld & Co LLP

Hausfeld is a leading disputes-only law firm specialising in competition law, with significant expertise in all aspects of collective redress and group claims, including abuse of dominance litigation against Big Tech and other large corporates.

The firm pioneered the Trucks Cartel litigation in the UK, Germany and the Netherlands. It has acted on some of the most complex damages claims of the last decade: on the “Interchange Fee” litigation against Visa and Mastercard, in “Google Shopping” claims on behalf of price comparison websites against Google; against six financial institutions over their participation in unlawful price-fixing of the foreign exchange currency markets; and against Google, Apple and Qualcomm in relation to their alleged abuse of dominance concerning Google Play Store, Apple App Store and the smartphone chip market respectively.

IMN’s inaugural International Litigation Finance Forum brought together a crowd of international thought-leaders from across the industry, showcasing perspectives from funders, lawyers, insurers and more across a packed day of content.

Following IMN’s successful New York conference, the London event demonstrated the growing reach and maturity of litigation funding, as topics covered everything from recent industry developments to the nuances of international arbitration and dispute resolution. At the core of the day’s discussion, the central themes of regulation, ESG and insurance were present throughout each session, with unique insights being shared by panelists.

The day began with a panel focused on the current state of litigation funding in Europe, where the topic of regulation took center-stage. Whilst most speakers agreed that the proposed reforms in the recently approved Voss Report were a step in the wrong direction for the industry, Deminor’s Erik Bomans offered a contrarian take on regulation, and highlighted that the very existence of this debate around regulation is a positive sign of the industry being taken seriously.

During the second panel on jurisdictional differences in Europe, this view was echoed by Clémence Lemétais of UGGC Avocats, who stated that it was promising that the EU parliament is raising the visibility of the industry, but that the draft resolution ‘shows a lack of knowledge’ about the industry itself. This was further reinforced in terms of individual country requirements by Koen Rutten of Finch Dispute Resolution, who argued that regulation has to be based on facts, and has to address a problem, which he does not see in the Nethlerlands.

A fireside chat with Rocco Pirozzolo of Harbour Underwriting gave the audience a detailed overview of the impact and evolving nature of ATE insurance on litigation funding. During this interview, Mr Pirozzolo highlighted the difference in approaches between insurers and funders when assessing cases, but further highlighted the need for collaboration between the two to deliver wider access to justice.

Two panels completed a busy morning of discussion, with the first providing insight into the evolving nature of funders’ approach to capitalization, and the second analyzing the best practice for those seeking funding. LCM’s Patrick Moloney honed in on the evolution of the industry having come from a place of being perceived as ‘the dark arts and then loan sharks’ to now being in a position where funders like LCM garner investment from public listing. Later, Ben Moss of Orchard Group, offered a detailed overview of how requests for funding should be best structured and highlighted the ‘holy trinity’ of ‘merits, budget and quantum’.

The afternoon saw a broadening of the range of discussions, kicking off with Tom Goodhead of Pogust Goodhead providing an insightful presentation on group litigation in the UK and the need for future reforms to enable growth. Another two panels brought a wealth of insights, with the topics of co-investing, diversification and the secondary market in the first, being followed by a wide-ranging discussion of the different types and applications of litigation insurance.

After a breakout meeting explored the best practices in talent development and growth for women in litigation finance, a trio of panels capped off the day’s agenda. In a wide-ranging discussion of innovative deal terms and structures, panelists from the likes of Brown Rudnick, Litigation Funding Advisers and Stifel, provided insight into everything from the effect of insurance on pricing to the increasingly technical and data-drive process of due-diligence.

Taking a more global approach for the penultimate panel, Alaco’s Nikos Asimakopoulos, skillfully guided the audience through a global look at enforcements and international arbitration. The panel of legal experts discussed an extensive range of topics, with Tatiana Sainati of Wiley Rein, spotlighting ESG as a primary driver in the increase in transnational disputes and particularly in the EU where ESG initiatives have taken hold.

In the final panel of the day, the topic focused in on the use of litigation funding by corporates and institutional investors. In an illuminating exchange, Woodsford’s Steven Friel played down claims by other funders that CFOs and other corporate executives primarily look to litigation funding for its ability to shift legal costs off the balance book. Instead, Friel and other panelists highlighted the need for funders to bring more than just capital to the table, and that true value could be brought through a funder’s insight, as well as its ability to manage the litigation process and reduce the non-financial resource burden on corporates.

Overall, IMN’s inaugural UK event displayed the incredible depth of the litigation funding industry and gave attendees a wealth of insights that will no doubt generate further discussion and debate among leaders. In a day of packed content, IMN’s roster of speakers and panelists provided both high-level overviews and detailed looks at the nuances of certain industry sub-sectors.

Deminor, a leading international litigation funder, projects that the investment potential for litigation funding in Europe is set to reach USD 1.8bn annually, representing nearly 16% of the global market. This is according to the white paper, Litigation Funding from a European Perspective, released today. Deminor predicts the investment potential for litigation funding in Europe is set to reach nearly USD 3.7bn in 2025 (+100%), compared to USD 17.8bn globally in 2020.

The actual amount invested in litigation annually is still a fraction of the investment potential estimated at 27% (USD 486m in Europe).  As a percentage of total litigation spend, actual amounts invested by third party funders in litigation represent less than 1%.  Real investments in litigation are likely to move closer to the investment potential over the next years, but fears that third party litigation funding is driving up the cost of doing business in Europe are largely overdone.

The white paper predicts the ESG agenda will be one of the drivers for growth in the UK and Europe, with cases having already been heard claiming damages for environmental harm. Climate and human rights issues are equally set to benefit from litigation funding over the next few years as this market looks to keep up with changing social issues. Other areas for growth include anti-trust damages, commercial litigation, including intellectual property, and data breaches.

Erik Bomans, CEO of Deminor, commented: “The growth of litigation funding in Europe will not only create a shift in perception, but in consumers’ and businesses’ ability to successfully resolve legal disputes that otherwise wouldn’t be accessible to them. Given the economic uncertainty, Deminor anticipates the market will shift towards businesses using the funding to be strategic with capital and release money that would otherwise be tied up in litigation. This is also likely to lead to more successful litigation outcomes where businesses can benefit from the knowledge of experts in the field.”

The report forecasts that while the EU market is still relatively small, the increase in the use of litigation funding is expected to hit annual growth of 8.3% in the next five years. Growing costs and focus on working capital is a key factor, prompting businesses to free-up working cash from long-term litigation projects and use litigation funding as a financial management tool. The United Kingdom is set to be the biggest single market contributor, with annual investment potential reaching USD 1bn.

Countries such as Germany and the Netherlands have been key players facilitating collective actions ahead of the European Representative Action Directive which makes a collective action mechanism available for consumers in all EU countries in the future. Several business lobby groups are calling for regulation of the litigation funding industry but, given the industry’s small scale in comparison to the litigation market as a whole, this looks premature.

Erik Bomans added: “Regulation is not necessarily negative and may create more certainty and transparency in the market, provided it is used to protect fair market competition and access to justice for all market players regardless of their financial means. The goal should be to give consumers and smaller companies litigation options to support justice, to champion social progress and to restore balance.”

About Deminor

Founded in 1990, Deminor is a leading privately-owned and international litigation funder with offices in Brussels, Hamburg, Hong Kong, London, Luxembourg, Madrid, Milan and New York. Deminor’s name, derived from the French “défense des minoritaires”, reflects its origins in providing services to minority shareholders. Deminor is still very much defined by the pursuit of good causes and its determination to restore justice for clients. Combining skill sets from 16 different nationalities and 14 languages, Deminor has funded cases in 18 jurisdictions including the Americas, the Middle East and offshore centres such as the Cayman Islands and Bermuda. With specialists in arbitration, intellectual property, competition, corporate & post-M&A, investments, enforcement, and tax litigation, Deminor has achieved positive recoveries for clients in more than 81% of the cases it has funded, against an industry average of 70%.

The High Court of Australia has today unanimously dismissed BHP’s attempt to block shareholders who are not resident in Australia from participating in a class action against the company.

The case, jointly run by Phi Finney McDonald and Maurice Blackburn, seeks recovery of investor losses caused by the mining company’s alleged breach of its disclosure obligations under the Corporations Act in relation to the catastrophic collapse of the Fundão dam in Brazil in 2015.

The High Court’s decision ends BHP’s multiple unsuccessful attempts over the last three years to exclude the claims of foreign residents who had invested in BHP Billiton Limited securities traded on the ASX, as well as investors in BHP Billiton Plc securities traded on the London and Johannesburg stock exchanges.

Cameron Myers, Special Counsel at Phi Finney McDonald, welcomed the High Court judgment.

“The High Court’s decision promotes access to justice, and confirms Australia’s class action regime as one of the most flexible and efficient mechanisms for resolving common issues between claimants. It ensures that foreign group members can seek redress and vindicate their claims in Australian courts,” he said.

“This decision has positive ramifications for all manner of class actions with an international element, including environmental claims. It will also benefit defendants who wish to resolve their liabilities, instead of cynically seeking to disenfranchise claimants.”

Irina Lubomirska, Special Counsel at Maurice Blackburn, welcomed the result.

“Despite the almost three-year delay occasioned by BHP’s appeals before the Full Federal Court and the High Court of Australia, we have steadfastly opposed BHP’s attempts to narrow the Federal class action regime. By rejecting BHP’s appeal, today’s High Court judgment endorses Parliament’s deliberate choice of a broader representative procedure which enhances access to justice and aids the efficiency of court processes,” she said.

“This is a welcome result not just for BHP’s shareholders but for all prospective group members, wherever located, who may continue to seek redress through our Federal class action regime.”

In today’s judgment in BHP Group Limited v. Impiombato & Anor (M12/2022), the Court stated, “BHP's construction of Pt IVA ignores the Constitution and the legislation passed by the Commonwealth Parliament vesting jurisdiction in the Federal Court, and rewrites the Federal Court of Australia Act.”

“Who makes the claim and where they live does not determine the jurisdiction of the Federal Court or the claims that may be brought in accordance with the procedures in Pt IVA.”

“BHP's construction would undermine the purpose of Pt IVA by not allowing non-residents to be group members in representative proceedings.”

On 31 May 2018, Impiombato v BHP Billiton Limited was filed in the Federal Court of Australia. The class action alleges that BHP breached its continuous disclosure obligations and engaged in misleading and deceptive conduct in its representations to the market.

Anyone who bought shares in BHP from 8 August 2012 through 9 November 2015 inclusive may be eligible to join this class action. Shareholders do not need to take any action to participate, but can register for further information at: www.bhpclassaction.com

Background

BHP, in a joint venture with Vale SA, owns Samarco Mineração SA, which operates the Germano iron ore mine in Minas Gerais state, Brazil. The 5 November 2015 collapse of the Fundão tailings dam at the Germano mine released approximately 60 million cubic meters of waste water in the largest tailings dam rupture ever recorded.

The mudflow flooded the nearby municipality of Bento Rodrigues and killed 19 people. Over 8,000 fishermen lost their livelihoods and 400,000 people lost access to potable water. The mudflow ultimately travelled 600 kilometres to the ocean, creating a toxic brown plume visible from space.

In the period that followed the dam collapse, BHP’s stock price plunged across all markets, falling 22% in Sydney and 23% in London and Johannesburg between 5 November 2015 and 30 November 2015. The class action will seek to recover losses to shareholders throughout this period, during which BHP’s combined market capitalisation fell by more than $25 billion.