Amazon fined for over 1 billion euro for abuse of dominant position in Italy

According to the ICA, Amazon breached Article 102 TFEU by abusing its dominant position in the Italian market for intermediation services on marketplaces.

The abusive conduct consisted in tying third-party sellers’ access to a set of exclusive benefits to their adoption of Amazon own logistics service – so-called “Fulfilment by Amazon” (“FBA”).

In particular, Amazon prevented third-party sellers from associating the Prime label with offers that were not managed with FBA.

According to the ICA findings, the Prime label is crucial to gain visibility and increase sales on Amazon.it. for the following reasons:

• It makes it easier to sell to the above 7 million consumers members of Amazon’s loyalty program;
• It allows sellers to participate in the well-known special events promoted by Amazon (e.g.: Black Friday, Cyber Monday, Prime Day); and
• It increases the likelihood of a seller’s offer to be selected as the “Featured Offer” displayed in the “Buy Box”.

In addition, the ICA found that third-party sellers using FBA are not subject to the stringent performance indicators that Amazon uses to monitor the performance of non-FBA sellers. Such strict performance indicators may also eventually lead to the suspension of non-compliant sellers’ account on Amazon.it.

Therefore, the ICA concluded that the obligation to use Amazon itself as a negotiator intermediary imposed by Amazon on sellers requiring Prime, while using equally-efficient third-party logistics services, amounts to a restriction of competition.

By implementing such abusive strategy, in the ICA opinion, Amazon harmed not only competing e-commerce logistics operators (which have been prevented from presenting themselves to online sellers as providers of services of comparable quality to Amazon’s FBA), but also competing marketplaces (indeed, in order to avoid the cost of duplicating warehouses, sellers who adopt Amazon's FBA are discouraged from offering their products on other online platforms).

The ICA concluded that the described strategy creates a monopolisation of the relevant market, not based on efficiencies, but rather taking the advantage of a model which cannot be replicated by other operators (as it links the visibility of third-party sellers on Amazon.it to their use of FBA logistics services).

Considering the seriousness, the duration, and the effects of the abusive strategy, as well as the size of Amazon Group, the ICA decided to impose on Amazon the said record fine of € 1,128 billion.

Moreover, with a view to restore competition in the relevant market, it also imposed behavioural measures on Amazon. Such measures include granting sales benefits and visibility on Amazon.it to all third-party sellers which are able to comply with fair and non-discriminatory standards for the fulfilment of their orders (that must in any case be in line with Amazon Prime service levels). In addition, up to 9 December 2022 (one year from the ICA decision) Amazon shall also refrain from negotiating rates and other contractual conditions with carriers and/or competing logistics operators on behalf of sellers.

Amazon’s compliance with the above-described measures is subject to the verification of a trustee.

For more information, please contact Federico Marini Balestra and Lucia Antonazzi.