Italy Fines Amazon $1.3 Billion for Abusing Its Dominant Market Position

Italy’s competition authority announced on Thursday that it has fined Amazon roughly $1.3 billion (€1.129 billion), alleging that the company “has harmed competing operators” by abusing its dominant market position and pushing third-party sellers to use Amazon’s logistics service Fulfillment by Amazon (FBA).

“Amazon holds a position of absolute dominance in the Italian marketplace brokerage services market, which has allowed it to promote its own logistics service, called Fulfillment by Amazon — ‘FBA’ — among the sellers active on the platform,” the Italian Competition Authority said.

Italy’s Competition Authority — formally known as the Autorità Garante della Concorrenza e del Mercato (AGCM) — went on to explain that sellers who take advantage of FBA receive “exclusive benefits,” such as the company’s paid loyalty program, Amazon Prime.

This, the AGCM says, “makes it easier to sell to the most loyal and high-spending consumers who are members of the Amazon loyalty program of the same name.”

Amazon Prime products are then included in the company’s special events, “such as Black Friday, Cyber ​​Monday, Prime Day, and increases the likelihood that the seller’s offer is selected as a Featured Offer and displayed in the so-called Buy Box.”

“Amazon thus prevented third-party sellers from associating the Prime label with offers not managed with FBA,” the AGCM said.

“The investigation found that these are functions of the Amazon.it platform that are crucial for the success of sellers and for increasing their sales,” the Italian authority added.

“Finally, the stringent performance measurement system to which Amazon subjects non-FBA sellers is not applied to third-party sellers who use FBA and failure to pass this can also lead to the suspension of the seller’s account,” the AGCM said.

Therefore, the Italian authority says “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 AGCM said.

“Furthermore, as a result of the abuse, competing marketplaces have also been damaged,” it added. “Due to the cost of duplicating warehouses, sellers who adopt Amazon logistics are discouraged from offering their products on other online platforms.”

This, according to the AGCM, is an “abusive strategy” that is “particularly serious,” therefore, the authority decided to impose “a fine of over 1 billion euros (1,128,596,156.33).”

In addition to the fine, the Italian authority is also calling on Amazon to create a new set of standards that is fair to third-party sellers, regardless of whether they are using FBA.

“Amazon must grant all sales and visibility privileges on its platform to all third-party sellers who know how to respect fair and non-discriminatory standards for fulfilling their orders, in line with the level of service that Amazon intends to guarantee Prime consumers,” the AGCM said.

The authority added that “Amazon will have to define and publish these standards and, starting one year from the decision, refrain from negotiating with the carriers and/or competing logistics operators — on behalf of the sellers — rates and other contractual conditions applied for the logistics of their orders on Amazon.it, outside of FBA.”

Amazon will also have to implement behavioral measures, and a monitoring trustee will review the changes, the AGCM said.

“The authority has imposed behavioral measures on Amazon that will be subjected to the scrutiny of a monitoring trustee” in order to “immediately restore competitive conditions in relevant markets,” it said.

In a statement to Tech Crunch, 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.”

The company added the following:

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.

Breitbart News will continue to report on Amazon’s stranglehold on global e-commerce.

You can follow Alana Mastrangelo on Facebook and Twitter at @ARmastrangelo, and on Instagram.