Amazon and SMEs

Debate between Christopher Chope and Kevin Brennan

Wednesday 27th March 2019 Westminster Hall

[Sir Christopher Chope (in the Chair)]

I call Kevin Barron to move the motion.

[Kevin Brennan (Cardiff West) (Lab)]

I beg to move,

That this House has considered Amazon and the treatment of SMEs.

It is Kevin Brennan, actually, Mr Chope. I was once briefly knighted in the Mail Online by a journalist making exactly the same mistake, but I always consider myself more shovelry than chivalry.

I am grateful for the opportunity to speak in the debate today about Amazon. I will tell a story about my constituent, Roland Brana, who this year should have been celebrating 20 years of his successful and growing family business, selling motorcycle protective clothing. He spent 11 years as a sole trader, then eight years as a limited company, and in each year he achieved continued growth. It was a successful, viable business with quality products that were competitively priced and in demand.

In 1999 his business, Bikers Gear, began importing self-designed own brand motorcycle clothing from a factory in Pakistan and sold it online via his own website and on eBay. In 2001 he opened a high street shop in Barry, south Wales, and in 2002 he accepted an invitation from Amazon to become a merchant on its newly launched non-video and book UK marketplace. His business continued to flourish. In March 2010, Bikers Gear UK was incorporated as a limited company and in 2013 the brand launched across Europe via Amazon’s European platforms.

In 2013 Bikers Gear registered for VAT in both Germany and France, and in 2014 a German and French speaking customer service team was launched, based in Leipzig. In 2015 Mr Brana completed EU-wide registration of the Bikers Gear trademark logo. This should be the story of a lad from a council estate and a single-parent family who made good. Instead, it is the story of a small businessman who finds himself having to start all over again, having had to close his business, because of the way that his small company, Bikers Gear UK, was treated by the global conglomerate Amazon.

The real problems started when Amazon approached Mr Brana in May 2016 for a retail manufacturer partnership. He accepted that as an opportunity for the business to go to the next stage. He would concentrate on expanding the manufacturing of the product and Amazon would concentrate on selling. Amazon forecast great potential for growth. He was aware that one of his manufacturers in Pakistan had a family relative trading in Australia, who sold similar motorcycle garments, so in 2010 he created an image user agreement to protect his online images from any potential infringement by this Australian brand.

Following the agreement, during 2017 Mr Brana began to receive offers of orders for more than €1 million from Amazon. To begin with he could not accept many of the orders because of delivery windows and not holding enough stock in south Wales. The problem lay with his main supplier in Pakistan, which was refusing many large purchase orders. He took action to drop this supplier. Because of this and complaints from Amazon regarding poor order acceptance rates, Mr Brana travelled to Luxembourg twice in 2017 and met Amazon buyers. Mr Brana reassured them that he would increase the stock in the south Wales warehouse to improve the order acceptance rate for 2018. He explained to Amazon buyers that the low acceptance rate was due to the problem at one particular factory, and explained that, to resolve the supply issue in 2018, he planned to introduce another supplier. He informed them that he would personally be investing £75,000 to increase his holding stock as he was fully committed to the Bikers Gear UK business, and that he would do so by re-mortgaging his home.

In 2018, Mr Brana approached Barclays Bank, obtained the mortgage and, as promised, began increasing the stock in his south Wales warehouse. All should have been well but, at the same time, he noticed that the Amazon order had by now almost stopped. He started investigating and noticed that the Australian brand had started selling its brand on the Amazon UK platform. At that point, it appeared to be offering different garments from the Bikers Gear UK garments and not selling products with his barcode or European article number—now known as the international article number—that delineated the product on websites. With the exception of the new 2018 range, however, no orders were being received from Amazon by Bikers Gear UK. Even its best-selling garments were not being ordered.

Mr Brana presumed that Amazon holding stock would run out and he would be able to return to selling the garments successfully, as he did prior to the 2016 Amazon agreement. He started checking the website stock level, which is clearly visible when someone makes a purchase on the Amazon website. It would state things such as, “Four left in stock—more on the way.” He checked back days later, and the stock available had gone up on his product from four to 18. It was clear that, even though Amazon had not purchased any new stock, its inventory was going up, not down. Something was clearly wrong.

Parking (Code of Practice) Bill

Debate between Christopher Chope and Kevin Brennan

3rd reading: House of Commons & Report stage: House of Commons
Friday 23rd November 2018 Commons Chamber

[Sir Christopher Chope]

With the greatest respect, perhaps my right hon. Friend’s point is relevant to my other amendments that relate to the time the Act must be passed. I do not see how having to go through a procurement process will interfere with the code of practice, unless the Government propose to delegate the drawing up of that code to some consultant—[Interruption.] My right hon. Friend says that the Government might want to do that. They might also feel the need to comply with the European Union procurement directive on this matter, but that is speculation.

My right hon. Friend has been, not obsessed, but very concerned about the abuse of private parking facilities for a long time, and this is a great opportunity to get legislation on the statute book and get something done. However, I say to my right hon. and hon. Friends who have great trust in the Government, that even if the Minister does not obstruct the Bill and exercises good will, as we have seen with public sector exit payments, there can be a big gap with those good intentions. I think the whole House supported the idea of a £95,000 cap on exit payments, yet two and a half years later there is no sign of that coming into effect, and the latest projection is that it will be sometime next year.

[Kevin Brennan (Cardiff West) (Lab)]

On amendment 7, how will the Secretary of State be judged on the requirement to “use his best endeavour” to carry this out within 12 months?

[Sir Christopher Chope]

That very challenging question is not dissimilar to the questions that I asked the Government and Prime Minister about what enforcement mechanism there will be to ensure that “best endeavours” as referred to in the withdrawal agreement will be implemented. In answer to a parliamentary question from me, the Minister replied on 22 November:

“The reference to best endeavours in Article 184 of the Withdrawal Agreement is a legally binding commitment that requires the United Kingdom and the EU to conduct themselves so that the negotiations on the future relationship are meaningful. It prohibits inflexible or obstructive behaviour and obliges the parties to pay reasonable regard to the interests of the other party.”

So in answer to the hon. Gentleman, that is the precedent that would be established. If he thinks that that is full of clarity, then I am sure he will be eager to support my amendment.

[Sir Christopher Chope]

With the greatest respect, I do not understand why my hon. Friend says that. According to the Government, “best endeavours” is a legal term, so why can we not incorporate it in the Bill in the same way that it has been proposed that it should be incorporated in the EU withdrawal legislation?

[Kevin Brennan]

My point is that in this instance best endeavours would always be in the eye of the beholder. The hon. Gentleman does not explain, in his amendments, how Ministers could be judged on whether they had used their best endeavours and what the consequences of any such judgment would be. Therefore, as an amendment—I know he is very careful about these sorts of things—it does not survive minimal scrutiny.

[Sir Christopher Chope]

In my submission, if an aggrieved member of the public felt that the Government had not been using their best endeavours to bring forward the code of practice and were thereby delaying the implementation of the will of Parliament, it would be open to that person to raise the matter by way of a judicial review, so there would be an enforcement mechanism.

[Sir Christopher Chope]

What my hon. Friend says is interesting if one applies the analogy of best endeavours to what is being discussed in the context of article 184 of the EU withdrawal agreement. In answer to another parliamentary question, the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Daventry (Chris Heaton-Harris) the Minister with responsibility for exiting the European Union stated:

“the primary remedy would be that the party in default would be obliged to return to the negotiating table and modify its position. In the event that there was further non-compliance, remedies may be imposed under the processes established by the withdrawal agreement.”

It may be that my amendment is just as weak as article 184 of the proposed EU withdrawal agreement seems to be.

[Kevin Brennan]

indicated assent.

[Sir Christopher Chope]

I see the hon. Gentleman is expressing his strong agreement.