Italy slaps Amazon with €1.1 billion fine for abusing dominant market position

U.S. technology giants have been in the firing line in the European Union (E.U.) over their business practices.

In the latest salvo, Italy’s competition watchdog said Amazon abused its dominant position by promoting its own logistics, or fulfilment, service that ships and delivers packages, on its Italian platform to the detriment of third-party sellers who did not use it.

“The abusive strategy adopted by Amazon is particularly serious, since it is likely to discourage, if not eliminate, competition in the relevant markets,” read the 250-page decision by the Italian Competition Authority.

The move comes two weeks after the same authority imposed a 68.7-million-euro fine on Amazon for infringing E.U. laws through restrictions that penalised sellers of Apple and Beats products.

In the same action, Apple was ordered to pay 134.5 million euros.

As Europe forges ahead with antitrust litigation, US regulators are closely watching its approach to big tech firms, after Washington pledged to intensify scrutiny of the technology industry.

‘Increasing Amazon’s power’

The watchdog said Amazon’s conduct under investigation dated from at least 2016, when it was possible to establish the online retailer’s dominant market position in Italy based on revenue.

The fine was calculated as a percentage of worldwide revenue of Seattle-based parent company Amazon.com, but the agency said it acted on its authority to boost it by 50 percent, after taking into account the global size and dominance of the company.

“In view of the need to ensure the effective deterrence of the sanction, taking into account the fact that the Amazon Group had a global turnover in 2020 of more than 330 billion euros and Amazon’s absolute importance at a global level, it is considered appropriate to apply a increase of 50 percent of the amount of the fine,” it wrote.

Going forward, Amazon must grant sales privileges and visibility to all third-party sellers who meet fair and non-discriminatory standards for fulfilment, and must decide and publish such standards.

Those would be subject to review by a monitor, the agency said.

In its decision, the Italian watchdog said third-party sellers who do not use Amazon’s fulfilment service are excluded from “a set of advantages essential for obtaining visibility and better sales prospects”.

Those included better access to Amazon’s “most loyal and high-end customers” who use Amazon Prime, the e-commerce giant’s loyalty program.

Moreover, a tough performance measurement system is reserved for sellers who do not use Amazon’s logistics system, which can lead, if failed, to suspension of the seller’s account.

E.U. action

Last month, E.U. legislation to impose unprecedented restrictions on how U.S. tech giants do business passed a first, significant hurdle, with a European Parliament committee approving their version of the Digital Markets Act.

That would slap far-reaching rules on companies like Amazon, Facebook, Google, Apple and Microsoft.

Such tech companies have been variously accused of stifling competition, not paying enough taxes, stealing media content and threatening democracy by spreading fake news.