Amazon fined €1.13bn by Italy's antitrust authorities for abusing its power
'Use our logistics service or don't. It'll cost you either way.'
Amazon was slapped with a whopping €1.13bn (£963.7m or $1.3bn) fine by Italy’s antitrust regulator on Thursday for “abusing its dominant position” and handicapping sellers that aren’t using its logistics service.
The ecommerce giant offers to pack, ship, and deliver goods sold by third-party vendors under its Fulfillment by Amazon (FBA) platform. Sellers only have to send their products to an Amazon warehouse, and its workers will handle everything else from there. Although the service is handy, it cuts into their profits.
FBA costs anywhere from $0.99 per item to $39.99 per month to process an unlimited number of orders in the US. Amazon also charges a referral fee that ranges from eight to 15 per cent on items, as well as any extra storage costs too. Vendors that cough up for FBA receive certain privileges that others do not, according to Italian authorities Autorità Garante della Concorrenza e del Mercato (AGCM).
Their products are included in Amazon’s Prime category, and are promoted more. Sellers that don’t use FBA are excluded from deals during large online sales events, such as Black Friday, Cyber Monday, or Prime Day. Other non-Amazon logistic services aren’t offered and aren’t integrated with the site, making it difficult for third-party vendors to seek other options.
“Amazon harmed competing e-commerce logistics operators, preventing them from presenting themselves to online sellers as providers of services of comparable quality to Amazon’s FBA and thus capable of ensuring high visibility on Amazon.it,” AGCM said in a statement.
“Such a conduct widened the gap between Amazon’s market power and its competitors’ also in the delivery of e-commerce parcels.”
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“As a result of the abuse, competing marketplaces have also been damaged: because of the cost of duplicating warehouses, sellers who adopt Amazon's logistics are discouraged from offering their products on other online platforms, at least with a product range as wide as that on Amazon.it. The Authority regarded Amazon’s abusive strategy as particularly serious and, considering its seriousness, its duration, the effects already produced and the size of the Group, decided to impose a fine.”
The €1.13bn sanction is one of the largest fines to be issued to Amazon from a European country yet. Amazon is planning to appeal the decision, according to the Wall Street Journal. The Register has asked the company for comment. ®