Italian Regulator Slaps $1.3 Billion Fine On Amazon For Abusing Its Market Position

by Bhaswati Guha Majumder - Dec 10, 2021 03:21 PM +05:30 IST
Italian Regulator Slaps $1.3 Billion Fine On Amazon For Abusing Its Market PositionItalian Regulator Slaps $1.3 Billion Fine On Amazon
Snapshot
  • The fine by Italy is one of the highest ever imposed by a single country in the European Union.

Antitrust officials in Italy fined Amazon $1.3 billion as the American e-commerce giant is accused of abusing its dominance in the online shopping sector to persuade Italian retailers to utilise its Fulfillment by Amazon logistics service (FBA). However, Amazon said that it will file an appeal.

As part of a years-long dispute over online antitrust issues, the fine is one of the highest ever imposed by a single country in the European Union.

Italian antitrust regulator penalised both Amazon and Apple last month for allegedly collaborating to limit the supply of Apple and Beats items. At that time, while Apple faced a $151.2 million fine, Amazon's fine was only $77 million — a drop in the bucket compared to the latest ruling. The lawsuit is still being contested by both companies.

The Autorità Garante della Concorrenza e del Mercato, or the Italian Competition Authority is the Competition regulator, is particularly concerned with the benefits Amazon provides to sellers on its platform who also pay to use its FBA logistics service in its new verdict. The Italian authority has explained its reasoning in a statement and a 250-page report.

It said that third-party merchants who use FBA or their own logistics stack do not receive the same treatment. Sellers that use FBA are eligible to join Amazon Prime, the company's paid loyalty programme. Some products are delivered free to subscribers.

Aside from Amazon's own inventory, products from third-party sellers that arrive at Amazon's warehouses via FBA also receive the Prime label.

Prime products are subsequently included in Amazon's events, such as Prime Day, Black Friday and Cyber Monday, with far-reaching repercussions. In other words, if you use Fulfillment by Amazon, you have a larger chance of being included in Amazon's events.

Additionally, on Amazon's product page, the business chooses a seller for the buy box automatically. On a computer, the buy box is the box on the right side of the screen that allows you to add items to your cart or purchase them straight away with the "Buy Now" button.

In a small box below the buy box, you can see other merchants. Merchants who use FBA have a larger probability of being listed in the buy box than other third-party sellers, according to Italy's antitrust regulator.

“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 fulfillment. These conducts have thus increased the gap between the power of Amazon and that of the competition also in the e-commerce order delivery business,” the statement added (translated via Google Translate).

According to the regulator or AGCM, the scale of the fine demonstrates the seriousness of Amazon's approach and its long duration.

It also said that in addition to paying the penalties, Amazon must adjust its business practises in Italy by providing the same sales and visibility advantages to all third-party merchants on its platform, regardless of whether they use Fulfillment by Amazon. Now, the American giant has a year to comply with these decisions.

However, as reported by Engadget, Amazon’s spokesperson said: “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 spokesperson further stated that small and medium-sized businesses (SMBs) account for more than half of all annual Amazon sales in Italy and their success is crucial to our business strategy.

“SMBs 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,” the spokesperson noted.

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