Amazon is officially a supermarket, much to its chagrin

In the United Kingdom, Amazon may officially call itself a supermarket chain, even though the American platform itself would prefer not to. The competition watchdog applied the label to prevent unfair commercial practices.

Rules on supplier relations

Amazon is gradually becoming a big fish in British food retail: total turnover from food and groceries has surpassed the one billion pound mark. For the British Competition and Market Authority (CMA), this was a signal to take action: every British retailer selling groceries worth more than one billion pounds is considered a food retailer and must comply with the Code (in full: the Groceries Supply Code of Practice).

This Code is a set of rules surrounding the formation and termination of contracts with suppliers to protect the supermarket chain’s suppliers from exploitation and unfair trading practices. Among other things, the Code stipulates that retailers may not suddenly change their supply contracts. Supermarket chains must provide a reason and respect a certain notice period when terminating a partnership. Compliance is monitored by an independent arbitrator, who suppliers can also contact in case of complaints.

“Chilling precedent”

Prior to this, Amazon strongly opposed the possible acknowledgement. The company would have called it a “chilling precedent”, according to the Financial Times, and argued that their British food division (the company Fresh & Wild) does not generate a billion, but “barely” a hundred million pounds in turnover from just seven stores.

The UK competition watchdog did not accept this reasoning, as Amazon EU also sells groceries in the UK. Amazon also operates 15 Amazon Fresh supermarkets, seven Whole Foods stores and one Amazon Go in the UK. In addition, in the UK, Jeff Bezos’ company cooperates with British supermarket chain Morrison’s and has a minority stake in Deliveroo.

Level playing field, also online

“Households across the UK are increasingly using Amazon to buy food and other essential items. Today’s decision to designate Amazon helps to ensure a level playing field for companies active in the groceries sector as people’s buying habits evolve”, said Adam Land from competition watchdog CMA. 

“These rules mean that the thousands of companies supplying Amazon with groceries are now protected from potential unfair business practices”, concluded Land. “We strive to build successful, long term relationships with our suppliers and look forward to working with the Groceries Code Adjudicator”, an Amazon spokesperson ultimately said.