Italy fines Amazon nearly £1BILLION in latest anti-trust clampdown

Italy fines Amazon nearly £1BILLION in latest anti-trust clampdown for abusing its dominance to favour its own logistics service

  • Italy’s competition watchdog has ordered Amazon to pay £943m antitrust fine
  • Regulator said it abused its dominant position by promoting its logistics service
  • Amazon said it ‘strongly’ disagreed with the decision and would be appealing
  • It comes just weeks after the same authority fined Amazon for infringing EU laws

Italian regulators have fined Amazon nearly £1billion for abusing its dominant position to favour its own logistics service.

Italy’s competition watchdog ordered Amazon to pay a £943million (1.1-billion-euro) antitrust fine on Thursday for allegedly abusing its dominance in the market.

The US big tech firms are the latest to fall foul of European fairness rules which has seen firms targeted across a range of issues, from the sale of consumer electronics, to the aggregation of news content on social media platforms. 

Now, the Italian Competition Authority said Amazon abused its dominant position by promoting its own logistics service Fulfilment by Amazon, which ships and delivers packages, on its Italian platform to the detriment of third-party sellers who did not use it.

The 250-page decision read: ‘The abusive strategy adopted by Amazon is particularly serious, since it is likely to discourage, if not eliminate, competition in the relevant markets.’

Amazon said it ‘strongly’ disagreed with the decision and would appeal.

Italy’s competition watchdog ordered Amazon to pay a £943million antitrust fine on Thursday for allegedly abusing its dominance in the market (file image)

‘The proposed fine and remedies are unjustified and disproportionate,’ the company said in a statement.

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 per cent, after taking into account the global size and dominance of the company. 

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. 

‘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. 

Amazon must now 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.

Amazon said it ‘strongly’ disagreed with the decision and would appeal. Amazon is owned by Jeff Bezos, the second richest man in the world after Elon Musk

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 popular loyalty program.

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

The decision comes just two weeks after the same Italian authority imposed a £58 million (68.7-million-euro) fine on Amazon for infringing EU laws, while Apple was ordered to pay £113 million (134.5 million euros) in the same action.

The tech firm and the e-commerce giant had entered into a deal to penalise official and non-official sellers of Apple products.

The agreement also covered Beats by Dre headphones, which are owned by Apple. 

Both Amazon and Apple said they intended to appeal against the fines levied in Italy. 

The Italian watchdog said a 2018 deal between the two US companies had ‘barred official and unofficial resellers of Apple and Beats products from using Amazon.it, allowing the sale of those products in that marketplace only to Amazon and to selected parties in a discriminatory manner’.

The aim had been to restrict the number of retailers and limit cross-border sales, it said.

The agreement spelled bad news for consumers, because at least 70 percent of electronics goods bought in Italy were purchased on Amazon.

The decision comes after the same Italian authority imposed a £58 million fine on Amazon for infringing EU laws, while Apple was ordered to pay £113 million in the same action (file image)

Amazon said it made no sense to suggest the e-commerce company benefitted ‘by excluding sellers’ because its business model ‘relies on their success’.

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.

In its statement, Apple said it believed ‘we have done nothing wrong’ and the agreement was part of efforts to ensure only genuine products were being sold through reseller partners.

The watchdog said its probe has inspired Germany and Spain antitrust authorities to ‘launch similar procedures’.

A crackdown on big tech firms could lead to the breakup of the largest platforms, with Europe powering ahead with antitrust litigation and US lawmakers eyeing moves to make antitrust enforcement easier.

Just days later, Italy’s antitrust watchdog confirmed it had also slapped Apple and Google with a total of £16million in fines.

The Italian competition authority said it fined Apple and Google £8million each for violations of the consumer code, including failing to provide enough information to customers and resorting to ‘aggressive methods’ in using their data. 

‘Neither Apple nor Google provided clear and immediate information on the acquisition and use of user data for commercial ends,’ the statement said.

The bout of fines in Italy comes just weeks after a European Union court rejected a Google appeal against a £2billion (2.4-billion-euro) antitrust fine.

The bout of fines in Italy comes just weeks after a European Union court rejected a Google appeal against a £2billion antitrust fine (file image) 

The Luxembourg-based European Court of Justice’s General Court ruled that it ‘largely dismisses’ Google’s appeal of that antitrust penalty and is upholding the fine.

In its appeal, Google and its parent company Alphabet had argued the EU was ‘wrong on the law, the facts, and the economics’ in the search engine case.

But the court said it dismissed ‘for the most part the action brought by the two companies, and upholds the fine imposed by the Commission’.

Giants Google, Apple, Facebook, Amazon and Microsoft have been accused of stifling competition, not paying enough taxes, stealing media content and threatening democracy by spreading fake news.

Big Tech critics want Apple and Google to loosen the grip of their online app marketplaces; more competition in a digital advertising market dominated by Google and Facebook; and better access to Amazon’s e-commerce platform by third-party sellers.

In terms of taxation, Italy, France, Germany and Spain won a major victory in June when the G7 richest nations agreed to a minimum global corporate tax rate for the world’s biggest companies, which include the US tech giants.

Nearly 140 countries have since backed the 15-percent tax.

The reform seeks to end the practice of big firms such as Apple and Google of sheltering profits in low-tax countries.

The EU has also unveiled plans for mammoth fines of up to 10 percent of sales on tech firms that break competition rules, which could even lead to them being broken up. 

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