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Italian regulator fines Amazon $1.28 billion for abusing its market dominance

It said Amazon holds a position of 'absolute dominance' with its fulfillment service.

Remo Casilli / reuters

Italy's antitrust authority (AGCM) has fined Amazon €1.13 billion ($1.28 billion) for "abuse of dominant position," the second penalty it has imposed on Amazon over the last month. Amazon holds a position of "absolute dominance" in the Italian brokerage services market, "which has allowed it to promote its own logistics service, called Fulfillment by Amazon (FBA)," the authority wrote in a (Google translated) press release.

According to the AGCM, companies must use Amazon's FBA service if they want access to key benefits like the Prime label, which in turn allows them to participate in Black Friday sales and other key events. "Amazon has thus prevented third-party sellers from associating the Prime label with offers not managed with FBA," it said.

The authority said access to those functions are "crucial" for seller success. It also noted that third-party sellers using FBA are not subject to the same stringent performance requirements as non-FBA sellers. As such, they're less likely to be suspended from the platform if they fail to meet certain goals. Finally, it noted that sellers using Amazon's logistics services are discouraged from offering their products on other online platforms, at least to the same extent they do on Amazon.

The AGCM said it imposed the steep fine as it considered Amazon's actions to be "particularly serious" given their duration and the effects they've caused. On top of the fine, it has demanded that Amazon grant the privileges enjoyed by FBA sellers to all third-party sellers, provided they respect other rules and laws. It will have to define and publish those standards within a year, and its actions will be enforced by a monitoring trustee.

In a statement to Engadget, an Amazon spokesperson said the company "strongly disagreed" with the decision and will appeal. It also noted that non-FBA sellers can use its Seller Fulfilled Prime (SFP) service, which gives them access to Prime benefits without having to use Amazon’s logistics services.

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 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.

Last month, Amazon and Apple were fined $228 million in Italy for unfairly restricting Beats sales by limiting them to select retailers. The EU also handed Amazon a record $888 million fine for violating the bloc's strict GDPR data privacy laws. Other tech giants are also under scrutiny in the EU. Notably, the EU recently opened an antitrust investigation into Apple's App Store rules, particularly over commissions related to in-app purchases.

Update 12/9/2021 4:43 AM ET: Amazon has provided a comment to Engadget which has been included in the article.