Amazon fined $1.3 billion by Italian competition authority for abusing market dominance
Amazon has been fined an additional $1.3 billion by the Italian antitrust authority, following a recent fine that saw the company charged ~$152 million just a few weeks ago. The reason for the previous fine was that Apple and Amazon had agreed to kick out select Apple product resellers from Amazon, forcing certain resellers to stop using Amazon Italy for selling Apple and Beats devices. The company’s latest fine by the same Italian watchdog authority is due to an alleged abuse of market dominance. This is one of the largest fines ever imposed on a U.S. company in Europe.
The AGCM, the Italian competition authority, said in a statement that Amazon and its other European-based companies had leveraged Fulfilled By Amazon (FBA) to force companies to sign up in order to “access a set of essential benefits to obtain visibility and better sales prospects on amazon.it“. Not only that, but the Prime label then stands out, which the AGCM says makes it easier to sell to “the most loyal and high-spending consumers”. Being a part of FBA, according to the AGCM, also allows companies to participate in the company’s sales events such as Black Friday, Cyber Monday, and Prime Day.
The AGCM alleges that Amazon third-party sellers using FBA don’t have a stringent performance measurement system that is subjected to non-FBA sellers. Failure to pass this performance measurement can lead to a suspension of the seller’s account. Furthermore, the existence of FBA has apparently also damaged competing marketplaces, as the cost of duplicating warehouses discourages sellers from offering all of their products on other online platforms.
Amazon said (via Reuters) in a statement that FBA “is a completely optional service” and that the majority of third-party sellers on Amazon do not use it. “When sellers choose FBA, they do so because it is efficient, convenient and competitive in terms of price. The proposed fine and remedies are unjustified and disproportionate”, it added.
The European Union Commission said it was cooperating closely with the AGCM, and that its investigation “complements today’s decision of the Italian competition authority which addresses Amazon’s conduct in the Italian logistics markets.”
It is worth noting that Amazon has a lesser-known service called Seller Fulfilled Prime, which gives sellers access to Prime benefits (including the Prime logo) without needing to make use of Amazon’s logistics, including warehouses. The AGCM has imposed a number of behavioral changes on the company that will be subject to review.