6 days ago
Competition watchdog is on the prowl so business must be alert
A recent investigation by the Competition and Markets Authority into Amazon in some ways typifies the regulator's old way of doing things.
Yes, the investigation centred around potentially fake or misleading reviews, which is very much an area of focus for the authority today, but this investigation started well before the new Digital Markets, Competition and Consumers Act 2024 came into effect. The case appears to have dragged on for almost half a decade and, after some back-and-forth between Amazon and the regulator, it has ended with Amazon providing undertakings to promise to take enhanced measures to tackle fake reviews on its platform.
Provided it does so, Amazon will not face any financial penalties. Importantly, there is no finding of any breach.
Amazon has promised to enhance its efforts to tackle fake reviews
DARRYL DYCK/THE CANADIAN PRESS/AP
Following the legislation coming into force in April this year, the authority's investigations will take on a different complexion. The organisation now has strong powers to investigate businesses and compel co-operation under threat of large daily fines, to conduct the investigation in a swift manner and to decide for itself — without needing to persuade the courts — whether the business under investigation has breached consumer law.
If it concludes there has been a breach, the authority can impose a range of sanctions, including a financial penalty of up to 10 per cent of a business's annual global turnover. These are not theoretical powers — as the authority has made clear, it intends to use them, so large fines may become the norm.
Unlike the Amazon case, which rumbled on for several years, the watchdog is now committed to conducting and concluding investigations quickly. Businesses under investigation will have significantly less time to gather information and prepare their responses, and the authority is much less likely to engage in protracted negotiations over undertakings.
If undertakings are involved — most likely in addition to, rather than instead of, financial penalties — the CMA will want them to be crisp. And it will punish breaches of those undertakings with further financial penalties.
This means retailers doing business in the UK — including those headquartered outside the country — will need to ensure they are complying with all the latest rules and guidance. It is advisable to focus on the authority's high priority areas, including fake and misleading reviews, which means that businesses can no longer take a hands-off approach to hosting them.
Other areas include pricing and discount claims, and hidden fees. The CMA will also be looking at a range of other unfair commercial behaviour, including aggressive practices and misleading actions or omissions, across a range of businesses.
Meanwhile, consumer organisations will be doing even more to draw to the authority's attention claims and activities by businesses that breach the law.
Geraint Lloyd-Taylor is a partner at the law firm Lewis Silkin
