Italy hits Amazon with €1.1 billion antitrust fine

Regulators say the tech giant abused its dominance by promoting its own logistics service

Italian regulators have hit Amazon with a hefty fine over antitrust practices. Reuters

Italian regulators have fined Amazon €1.1 billion ($1.3 billion) for allegedly abusing its market dominance, in one of the biggest penalties imposed on a US tech company in Europe.

US technology giants have come under increased scrutiny in the European Union over their business practices.

In the latest salvo, Italy's competition watchdog said on Thursday that Amazon abused its dominant position by promoting its own logistics service on its Italian platform, Fulfilment by Amazon (FBA).

“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.

The authority said Amazon tied the use of FBA access to a set of exclusive benefits, including the Prime label, that help increase visibility and boost sales on Amazon.it.

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

The Prime label makes it easier to sell to the more than 7 million most loyal and high-spending consumers members of Amazon’s loyalty programme.

The antitrust authority also said it would impose corrective steps that will be subject to review by a monitoring trustee.

The abusive strategy adopted by Amazon is particularly serious

Amazon said 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 US group said in a statement.

“The proposed fine and remedies are unjustified and disproportionate”, it added. It plans to appeal.

The EU Commission said it had co-operated closely with the Italian competition authority on the case, within the framework of the European Competition Network, to ensure consistency with its own two continuing investigations into Amazon's business practices.

The first was opened in July 2019 to assess whether Amazon's use of sensitive data from independent retailers which sell on its marketplace was in breach of EU competition rules.

The second, in late 2020, focused on the possible preferential treatment of Amazon's own retail offers and those of marketplace sellers that use Amazon's logistics and delivery services.

“This investigation complements today’s decision of the Italian competition authority which addresses Amazon’s conduct in the Italian logistics markets,” the Commission said on Thursday.