GAFA bingo: Amazon gets a late invite to the CMA enforcement party

The CMA announced last Wednesday that it has launched an investigation into potential anticompetitive practices by Amazon affecting sellers on its Marketplace. It is the sixth investigation the CMA has opened into a “GAFA” (the first targeting Amazon) since the CMA’s outgoing CEO said last February that he was no longer willing to wait for new powers to tackle Big Tech. In this post, we examine the CMA’s latest case and look across the CMA’s enforcement docket to identify trends in targets and sources of the CMA’s investigations.

CMA completes GAFA bingo with first dominance case against Amazon

The Amazon Marketplace investigation launched last week will consider whether Amazon (i) has a dominant position in the UK, and (ii) is abusing that position and distorting competition by giving an unfair advantage to its own retail business or sellers that use its services, compared to other third-party sellers. Specifically, the CMA’s press release indicates it is concerned with three practices:

• data collection on independent Marketplace sellers;
• presentation of preferred sellers in the "Buy Box"; and
• eligibility criteria of the Prime service.

This is the first abuse of dominance case the CMA has brought against Amazon, though of course not Amazon’s first encounter with the CMA. The CMA has an open investigation under its consumer powers into fake reviews on Amazon (and Google) and a decade ago investigated Amazon’s use of price parity clauses on Marketplace (not to mention merger scrutiny – who could forget Amazon / Deliveroo).

Amazon may be new on the CMA’s dominance docket but the allegations of anticompetitive practices on Marketplace are not: the European Commission’s has two (much more advanced) probes covering similar practices and Amazon received its charge sheet in relation to its use of marketplace data over 18 months ago. While the EU’s 2020 charge sheet covers the UK, the CMA’s press release states the EU case does “does not cover ongoing issues affecting the UK now that it has left the European Union” and that it will liaise with the EU as its investigation progresses.

The CMA’s ever expanding enforcement docket

The Amazon Marketplace investigation brings the number of active CMA antitrust investigations (excluding market studies) in the tech space to six. The investigations span various aspects of the tech landscape, including digital advertising, app distribution, websites and online marketplaces.

Despite being spread across the tech landscape, some common themes have emerged, including the CMA’s focus on data collection practices which it suspects have been aimed at and/or resulted in self-preferencing by Big Tech. In addition, the CMA has identified practices in a number of investigations which it believes are linked to a power imbalance amongst players in the relevant space, for e.g. app developers vs distributors (e.g. in respect of Google’s Play Billing System and Apple AppStore T&Cs).

The CMA is expected to make a market investigation reference later this month in mobile browsers (Apple and Google) and cloud gaming (Apple). If the reference goes ahead, it will be the first time the CMA uses this wide ranging power (which includes the ability to force breakup of businesses) in the tech space, having previously preferred to wait for new tech-specific regulation.

The CMA also continues to administer commitments accepted earlier this year in relation to Google Sandbox, following the swift closure of the investigation in return for an important seat at the table in Google’s plans to phase out third party cookies.

Learning by numbers 

A stocktake of these eight cases reveals some very clear trends in the CMA’s enforcement:

• Google the lead actor: In terms of players, Google is the lead actor, with a role in five of the eight investigations, Apple and Meta are tied on two each, while Amazon lags behind with just one.
  
  
• Focus on abuse of dominance: All but two of the CMA’s investigations are focused on alleged abuse of dominance, with the notable exceptions of the Jedi Blue investigation (which is assessing whether there is an anticompetitive agreement or concerted practice between Google and Meta) and the forthcoming Market Investigation Reference (which is focused more broadly on how markets function rather than illegal conduct by specific actors).
  
  
• Enforcement triggers: Finally and perhaps most interestingly for predicting future enforcement:
  • Market studies: The CMA’s own market studies are by far the most fertile ground for identifying new antitrust investigations, with five of the eight investigations arising out of the findings of market studies.
  • EU investigations: While only two of the current investigations seem to arise directly out of EU investigations (though the EU has a parallel investigation into Jedi Blue), these could be expected to become a more common source of investigations as the Brexit transition arrangements which prohibited the CMA opening investigations into the same conduct the European Commission recede into history.
  • Complaints: Only one case (Google Sandbox) arose out of a complaint.

What’s next

With no concrete timeline for the UK’s Digital Market Unit’s (DMU) to receive its statutory powers, the CMA has promised to “maximise the use” of current tools “while we await legislation for the new digital regime”. The new Amazon investigation will certainly not be the last case opened by the CMA in the space and the music streaming study will be particularly interesting to watch to see if the scope of enforcement may extend beyond the GAFAs.

But the CMA will soon have a significant handicap. Much of the conduct covered by the CMA’s existing investigations will soon be subject to presumptions of illegality in the EU under the Digital Markets Act, which comes into force next year. The CMA on the other hand will need to go through the onerous process of establishing all the elements of an infringement under existing antitrust law.

As of today therefore, the UK remains one of the most aggressive authorities involved in antitrust enforcement in the digital space (even if the latest investigation is a copycat of an EU investigation), but the CMA will soon have to work double-time to keep up.