Italy fines Amazon $1.3 billion for abuse of power

Amazon has been fined $1.28 billion by Italy’s antitrust watchdog saying that the company illegally abused market dominance. The fine is considered one of the biggest penalties imposed on a U.S. tech giant in Europe by a single nation as part of a years-long battle over online antitrust issues.

“The investigation has ascertained that these are functions of the 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 fulfillment. These conducts have thus widened the gap between Amazon’s power and that of the competition also in the e-commerce order delivery business,” it noted.

As such, both companies are disputing the case, which makes the fine only $77 million for Amazon — a drop in the bucket compared to today’s judgment.

Amazon and Apple were both fined by Italian antitrust regulators for allegedly conspiring to limit the supply of Apple and Beats products.

Some of the consequences of that decision are that Prime products are then included in Amazon’s events, such as Prime Day, Black Friday, and Cyber Monday. This means that people have a better chance of getting featured in Amazon’s affairs if they use Fulfillment by Amazon.

On the other hand, the Italian authority asked Amazon to create a new set of standards that would be fair to third-party sellers whether they are using FBA or not.  Also, Amazon will have to implement behavioral measures, while a monitoring trustee will review the changes.

In addition, Amazon 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.

“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 in supporting 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.

Last but not least, a study from the Institute for Local Self-Reliance stressed that Amazon is generating more and more revenue from third-party sellers, highlighting that FBA is a vicious circle and that third-party sellers have become a captive audience.