Amazon has been fined $1.2 billion by Italy’s antitrust authority, Autorità Garante della Concorrenza e del Mercato or AGCM, for abusing its dominant market position. This is the second penalty AGCM has imposed on the e-commerce company over the last month. The fine is one of the largest leveraged against the company in the European Union and forms part of a long-time battle over online antitrust laws.
Explaining the Amazon fine in a press release, the antitrust watchdog said the retail giant holds a position of absolute dominance in the Italian brokerage services market. This has allowed it to promote its own logistics service, often pushing third-party selling to use Fulfillment by Amazon (FBA). According to the AGCM, sellers have to use Amazon’s logistics if they want access to benefits like the Prime label. This in turn allows them to participate in Black Friday sales and other key events.
The AGCM said having access to those functions is crucial for seller success. The antitrust authority observed that third-party sellers using Fulfillment by Amazon are not subject to the same stringent performance requirements as non-FBA sellers. They’re also less likely to be suspended from the platform if they fail to meet certain goals. Additionally, it noted that sellers using Amazon’s logistics services are discouraged from offering their products on other digital platforms (via Engadget).
As such, the Italian watchdog ruled that Amazon’s actions have harmed competing e-commerce logistics operators by preventing them from marketing themselves to online sellers as providers of services comparable to the quality of Amazon’s FBA logistics. This conduct has widened the gap between Amazon’s power and that of the competition in the e-commerce order delivery business.
Moreover, the AGCM said it imposed the hefty billion dollar fine because it considers Amazon’s actions to be very serious given the duration and the effect they have caused. The authority has also ordered Amazon to give the same privileges enjoyed by FBA sellers to all third-party sellers, provided they abide by the rules and laws. The company will have to define and publish those standards within a year. And its actions will be enforced by a monitoring trustee, reports The Verge.
Addressing the large fine, an Amazon spokesperson said the company strongly disagrees with the decision and has plans to appeal. The e-commerce giant also said non-FBA sellers can use its Seller Fulfilled Prime (SFP) service, which gives them access to Prime benefits without having to use Amazon’s logistics services. “We strongly disagree with the decision of the Italian Competition Authority (ICA) and we will appeal.”
Amazon sees the proposed fine and remedies as unjustified and disproportionate. According to the company, more than half of all annual sales on Amazon in Italy come from SMBs, and their success is at the heart of their business model. All businesses have access to various channels with which to sell their products – both online and offline. Amazon just happens to be one of those options. “We constantly invest to support the growth of the 18,000 Italian SMBs that sell on Amazon, and we provide multiple tools to our sellers, including those who manage shipments themselves,” the spokesperson told Engadget.
Interestingly, this is not the first time Amazon has come under fire for breaking antitrust laws in Italy. Last month, Amazon was fined by antitrust regulators for conspiring to limit the supply of Apple and Beats products. The company is currently disputing the case.