Amazon Fined Record $1.3 Billion By Italian Regulators

Amazon has been shocked on Thursday, after Italy’s antitrust watchdog levelled a punishing 1.13 billion euros ($1.28 billion) fine against the e-commerce giant.

The Autorità Garante della Concorrenza e del Mercato (AGCM) said Thursday that Amazon had allegedly harmed competing operators in the e-commerce logistics service.

But Amazon strongly disagrees, and called the proposed fine “unjustified and disproportionate” and said it would appeal.

Italian fine

Amazon (and Apple) it should be remembered are already smarting after an investigation in 2020 saw the Italian offices of both firms raided, amid a probe into whether both firms colluded so only selected resellers were allowed to sell Apple products, such as iPhones, iPad, and Apple Watch, and Beats headphones on Amazon’s Italian marketplace.

Italian officials concluded that both parties had engaged in these practices, and fined Apple 134.5m euros ($151m), while Amazon was fined for 68.7m euros ($77m).

But now Italy’s antitrust watchdog has imposed one of the biggest penalties imposed on an American tech giant in Europe, after Amazon was fined 1.13 billion euros ($1.28 billion) for alleged abuse of its market dominance.

“Amazon holds a dominant position in the Italian market for intermediation services on marketplaces, which Amazon leveraged to favour the adoption of its own logistics service – Fulfilment by Amazon (FBA) – by sellers active on Amazon.it to the detriment of the logistics services offered by competing operators, as well as to strengthen its own dominant position,” said Italy’s AGCM.

The officials considered that Amazon tied to the use of FBA the access to a set of exclusive benefits essential for gaining visibility and increase sales on Amazon.it.

“Among those benefits, the most relevant is the Prime label, which makes it easier to sell to the above 7 million most loyal and high-spending consumers members of Amazon’s loyalty program,” it said. “Amazon prevents third-party sellers from associating the Prime label with offers not managed with FBA.”

Italian officials pointed out that the Prime label allows sellers to participate in the well-known special events, such as Black Friday, Cyber Monday, Prime Day – and increases the likelihood of a seller’s offer to be selected as the Featured Offer displayed in the Buy Box.

The officials said their investigation showed that such benefits are crucial to gain visibility, to boost sales and, in turn, to the success of sellers’ offers on Amazon.it.

In addition, third-party sellers using FBA are not subject to the stringent performance indicators that Amazon applies to monitor the non-FBA sellers’ performance, which can ultimately lead to the suspension of non-compliant sellers’ account on Amazon.it, the officials stated.

“As a result of the abuse, competing marketplaces have also been damaged: because of the cost of duplicating warehouses, sellers who adopt Amazon’s logistics are discouraged from offering their products on other online platforms, at least with a product range as wide as that on Amazon.it,” said the Italian officials.

“The Authority regarded Amazon’s abusive strategy as particularly serious and, considering its seriousness, its duration, the effects already produced and the size of the Group, decided to impose a fine,” they added.

The AGCM also said that in order to immediately restore competitive conditions in the relevant markets, it has imposed behavioural measures on Amazon that will be subject to review by a monitoring trustee.

Amazon response

Amazon responded and said FBA “is a completely optional service” and that the majority of third-party sellers on Amazon do not use it, Reuters reported.

“When sellers choose FBA, they do so because it is efficient, convenient and competitive in terms of price”, the US group was quoted as saying in a statement.

“The proposed fine and remedies are unjustified and disproportionate,” it added, and confirmed it will appeal the proposed fine.

The EU Commission meanwhile said it had cooperated closely with the Italian competition authority on the case, within the framework of the European Competition Network, to ensure consistency with its two own ongoing investigations into Amazon’s business practices.