Amazon and Apple accused of striking a secret deal to increase the cost of Apple products

A new £500 million consumer lawsuit is demanding compensation for the millions of affected UK consumers.

A  collective action lawsuit has been filed today accusing tech giants, Apple and Amazon, of doing a deal in 2018 to unlawfully increase the price of Apple products. This anti-competitive conduct is claimed to have cost UK consumers at least £500 million.

Amazon is said to have culled its marketplace of independent retailers selling discounted products from Apple and Beats, its headphone brand, to keep prices high. Apple, in return, gave Amazon preferential wholesale prices on Apple and Beats products for its own customer sales.

Consumer law expert, Professor Christine Riefa, who filed today’s claim, said:

‘Millions of consumers in the UK enjoy the services and products of Apple and Amazon. They do not suspect that those companies collude to make them pay more for their electronics and reduce their choice. I believe that big businesses like Apple and Amazon should behave fairly and compete on merits, not by using underhand tactics.’

What have Amazon and Apple done wrong?

The agreement between Amazon and Apple is claimed to breach competition law by restricting independent sellers from reselling cheaper Apple and Beats products on Amazon’s marketplace. This led to customers paying – and continuing to pay – higher prices for Apple and Beats products bought from Apple, Amazon and from other retailers.

The claim says that by January 2019 almost all independent sellers of Apple and Beats products had disappeared from Amazon’s marketplace as a result of the secret deal. Since then, there has been a significant increase in sales of Apple and Beats products at non-discounted prices to the benefit of both Apple and Amazon.

Riefa, who is seeking to lead the claim on behalf of millions of UK consumer, said:

‘Each company has an effective stranglehold over its market, and they are misusing that advantage to shut out competition from independent merchants – unlawfully lining their wallets at the expense of consumers. It’s a betrayal of their customers’ loyalty.’

Legal teams behind the claims

Riefa has instructed the law firm Hausfeld & Co. LLP to represent her in this claim against Amazon and Apple. 

Wessen Jazrawi, a partner at Hausfeld, who is leading the litigation, said:

‘‘Apple and Amazon have worked together to exclude competitors on the Amazon platform and to reduce the availability of discounted products, at their customers’ expense.’ 

The claim was filed today at the specialist competition court, the Competition Appeal Tribunal.

Who is eligible for compensation?

Anybody who bought a new Apple device or Beats headphones since October 2018 could be eligible to claim. This includes 7 million Amazon customers who could be owed almost £500 million and 29 million people who bought Apple or Beats products from other retailers – including Apple and Curry’s, which will further increase the total claim for compensation.

Sign up to Consumer Voice to stay updated as the claim progresses. 

Amazon says claim is ‘without merit’

We contacted Apple and Amazon for a response. An Amazon spokesperson said:

‘This claim is without merit, and we’re confident that this will become clear throughout the process. As a result of our agreement with Apple, customers can find the latest Apple and Beats products on our store, and they benefit from an expanded range with better deals and faster shipping.’

Investigations into Apple and Amazon’s conduct

The deal hatched between Apple and Amazon covers a number of countries. A class action lawsuit has been filed against the companies in the United States. Competition regulators in Italy and Spain have said that the deal is in breach of EU competition law, and Germany has an ongoing regulatory investigation.

Apple and Amazon are the subject of separate legal claims for allegedly abusing their dominant position and bumping up prices at the expense of UK consumers. Amazon faces two competing multi-million pound consumer lawsuits for favouring its own products and not always offering consumers the best deals. 

Apple faces a £1.5 billion legal claim which accuses Apple of overcharging 20 million UK customers in its popular App Store. And, in a £768 million claim, Apple is accused of selling iPhones with defective batteries that caused performance problems.