Amazon officially a supermarket, say competition chiefs

Amazon is now officially a supermarket, the competition watchdog has said, in a move that means the tech behemoth will be covered by stricter rules policing the way grocers treat their suppliers. 

The company – which sells groceries online through its Fresh service and also owns upmarket chain Whole Foods – joins 12 other companies that are classed as “grocers” by the Competition and Markets Authority (CMA), including Tesco and Sainsbury’s.

These businesses must all adhere to a code of practice that prevents them from squeezing suppliers. It applies to retailers that make £1bn or more annually from grocery sales.

Bryan Roberts, an independent retail analyst, said the move is aimed at protecting Amazon suppliers from unfair treatment. 

He added: “They are growing their store estate, they own Whole Foods, they put enough sales through the main business now to qualify as a grocer.”

Mr Roberts said that the classification might prove problematic in future if Amazon ever decided to make a swoop on a UK rival, after years of intense speculation. 

It bought organic chain Whole Foods for £10.7bn in 2017, giving the company a handful of stores in London as well as around 500 in the US. Whole Foods turns over less than £100m a year in the UK.

Amazon also launched its Fresh online food delivery business in 2016 in the UK and has opened 15 physical stores since, with hundreds more in the pipeline in the coming years, according to reports. In addition, it has a minority stake in the takeaway company Deliveroo. 

The company’s overall sales in Britain rose by a fifth last year to $31.9bn (£23.6bn), equal to £350 per person and ahead of those of Asda, the country’s third-biggest retailer.

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

Kien Tan, a retail director at PwC, said: “The CMA is clearly trying to drag them in, and Amazon is trying to keep a low profile, but sooner than later they were going to get there anyway. I think we all underestimated the scale of Amazon in the UK.” 

A spokesman for Amazon said: “We strive to build successful, long term relationships with our suppliers and look forward to working with the Groceries Code Adjudicator. 

“We are proud to work with thousands of suppliers and offer a great shop window for their products in the UK and around the world.”

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