The UK Is Investigating Amazon (AMZN) for Not Paying Its Suppliers on Time

E-commerce giant Amazon (AMZN) is being investigated by the UK’s grocery regulator, the Groceries Code Adjudicator (GCA), for not paying its suppliers on time. This would violate Article 5 of the UK’s Groceries Supply Code of Practice, which says that retailers must pay suppliers “within a reasonable time” after receiving their invoice. If Amazon is found to have breached the code, it could face a fine of up to 1% of its annual grocery turnover in the UK.

The GCA said that it had been monitoring Amazon’s actions after warning the company last year to fix its practices. After reviewing more evidence, the regulator decided to launch a formal investigation focused specifically on Amazon’s compliance with the payment timing rule. The GCA is responsible for making sure large grocery retailers treat their suppliers fairly, and this move suggests Amazon hasn’t done enough to address previous concerns.

While Amazon’s grocery operations are smaller in the UK than in other markets, they are still significant. Estimates suggest that Amazon has between 1.6% and 3% of the UK grocery market, compared to Tesco’s 29%. Amazon doesn’t break out UK grocery sales in its earnings reports, but the Competition and Markets Authority requires companies with over £1 billion in UK grocery turnover to follow the Groceries Code, which implies that Amazon exceeds that threshold. Following news of the investigation, Amazon’s stock opened lower on Friday and continued to trade in the red for a third straight session.

What Is the Price Target for AMZN Stock?

Turning to Wall Street, analysts have a Strong Buy consensus rating on Amazon stock based on 46 Buys and one Hold assigned in the past three months. Furthermore, the average AMZN stock price target of $241.64 implies 15% upside potential from current levels.

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