News: Italy slaps US$1.30 billion fine on Amazon for abusing market dominance

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Italy slaps US$1.30 billion fine on Amazon for abusing market dominance

The e-commerce giant deliberately edged competing logistics operators out of the market, according to Italy's antitrust regulator.
Italy slaps US$1.30 billion fine on Amazon for abusing market dominance

The Italian antitrust regulator on Thursday fined American e-commerce giant Amazon nearly US$1.30 billion ($1.13 billion euros) for abusing its market dominance.

Amazon had harmed competing operators in the e-commerce logistics service, according to The Autorità Garante della Concorrenza e del Mercato (AGCM), the Italian competition watchdog.

The watchdog concluded that Amazon took advantage of its dominant position to nudge sellers on Amazon.it to use its own logistics service — Fulfilment by Amazon (FBA). This was done “to the detriment of the logistics services offered by competing operators, as well as to strengthen its own dominant position.”

AGCM said it will impose corrective steps that will be subject to review by a monitoring trustee.

Amazon, on its part, said it “strongly” disagreed with the Italian authority’s fine, vowing to appeal against it. “The proposed fine and remedies are unjustified and disproportionate,” an Amazon spokesperson told CNBC.

The online retailer said more than 50% of its sales on its platform in Italy came from small and medium-sized business, adding that their success was key to Amazon’s 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,” the Amazon spokesperson added.

A global pushback

The COVID-19 pandemic roiled businesses and upended lives, but provided a massive tailwind to online retailers globally, as consumers, confined to their homes to dodge the deadly virus, relied on them for precious supplies during the months-long Great Lockdown beginning the spring of 2020. For instance, India’s online retail market is expected to grow by at least 25% per annum to swell to $140 billion by 2025-26, according to a study by global consultancy Bain & Company.

But amid this economic boost, tech giants such as Google, Amazon, and Facebook - now known as Meta - have been coming under regulatory crosshairs with growing frequency across the globe. Their sprawl and dominance raise uncomfortable questions around data privacy, national security, and market dominance and abuse.   

In one ongoing case, the Competition Commission of India is investigating complaints against Walmart-owned Flipkart and Amazon, alleging that they practise deep-discounting and favouritism to select sellers. In July, the Karnataka High Court threw out an appeal by the two e-commerce companies that sought to prevent a probe by the country’s fair-play watchdog.

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