Amazon Has Been Fined $1.3 Billion By Italy For Abusing Its Dominant Market Position

On Thursday, the Italian antitrust regulator announced that it had charged Amazon 1.13 billion euros ($1.28 billion) for suspected market dominance abuse, one of the largest penalties issued on a U.S. internet company in Europe. Amazon has urged third-party vendors to adopt Fulfillment by Amazon (FBA), the company’s logistics service. 

 On the other hand, Amazon stated that it “strongly disagreed” with the Italian regulator’s decision and would file an appeal.

The Autorità Garante della Concorrenza e del Mercato (AGCM) in Italy explains its reasoning in a statement and a 250-page report. Third-party merchants, they claim, do not receive the same treatment whether they use FBA or their own logistics stack.

Sellers who take advantage of FBA can participate in the company’s paid loyalty program, Amazon Prime. Subscribers get free deliveries on some products. In addition to Amazon’s own inventory, products from third-party sellers from Amazon’s warehouse also get a Prime label.

This does have implications because Prime products are now included in Amazon events such as Prime Day, Black Friday, and Cyber Monday. In other words, if you use Fulfillment by Amazon, you have a larger chance of being included in Amazon’s events.

“The investigation has ascertained that these are functions of the ‘Amazon.it’ platform that are crucial for the success of sellers and for increasing their sales,” said the ACGM in a statement.

“In doing so, Amazon has harmed competing e-commerce logistics operators by preventing them from proposing themselves to online sellers as providers of services of a quality comparable to that of Amazon’s fulfilment. These conducts have thus widened the gap between Amazon’s power and that of the competition also in the e-commerce order delivery business.”

According to the ACGM, the fine demonstrates the seriousness of Amazon’s approach. The Italian government has requested Amazon to develop a new set of regulations that are fair to third-party sellers, whether they use FBA or not. In addition, behavioural measures must be implemented by the organisation. The adjustments will be reviewed by a trustee who will act as a watchdog.

Unless it wins its appeal, Amazon has a year to comply with these rulings.

“We strongly disagree with the decision of the Italian Competition Authority (ICA), and we will appeal. The proposed fine and remedies are unjustified and disproportionate,” the company said in a statement.

“More than half of all annual sales on Amazon in Italy come from SMBs, and their success is at the heart of our business model. Small and medium-sized businesses have multiple channels to sell their products both online and offline: Amazon is just 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,” it added.