(Bloomberg) —
Britain’s antitrust regulator designated Amazon.com Inc. as a grocery retailer, subjecting the online retail giant to the same rules followed by U.K. supermarket chains, such as Tesco Plc.
The Groceries Supply Code of Practice prohibits companies from making changes to supply contracts at short notice, and requires retailers to give appropriate period of notice if they no longer want to use a supplier and demand reasons for ending contracts. It means that Amazon could now face a fine of as much as 1% of its U.K. revenue if it’s deemed to have mistreated vendors.
The Seattle-based company sells groceries online under its Amazon Fresh banner, as well as through a partnership with supermarket chain Wm Morrison Supermarkets Plc. It has 15 Amazon Fresh stores and seven Whole Foods stores in Greater London and has a minority stake in food delivery service Deliveroo.
“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, senior director of remedies, business and financial analysis at the Competition and Markets Authority.
To be governed by the rules, grocers must have annual sales of more than 1 billion pounds ($1.36 billion). Compliance is managed by the independent Groceries Code Adjudicator.
When the adjudicator was set up in 2013 it was given powers to oversee the behavior of ten supermarket groups, arbitrate on disputes and fine errant grocers. It has since expanded the number of operators it oversees, for example, adding Ocado, and B&M Homestores, the discount retailer, in 2018.
One of its biggest investigations was into Tesco, the country’s largest grocer, which it found guilty of “serious breaches” of industry rules in 2016.
“We strive to build successful, long term relationships with our suppliers and look forward to working with the Groceries Code Adjudicator,” Amazon said in an emailed statement.
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