In Italy, the market and competition regulator has imposed a billion euro fine on Amazon. The reason given is that Amazon has exploited its market power to put its in-house logistics service in a particularly favorable position compared with competing offers. In doing so, legally permissible limits had been exceeded.
Fulfilment by Amazon (FBA)
Specifically, the case concerns the logistics service Fulfilment by Amazon, or FBA for short, which is open to all merchants operating on Amazon’s marketplace. Those who use the service outsource their entire logistics to Amazon and receive numerous competitive advantages in return.
For example, Amazon only gives FBA merchants the opportunity to obtain the Prime label, which guarantees premium customers free shipping and particularly fast delivery. Participation in special promotions such as Black Friday and Cyber Monday is also only possible if the FBA service is used. Another advantage is that the performance requirements that must be met in order to continue selling through Amazon are lower for FBA merchants than for those who handle their own logistics or have contracted the competition to do so.
Particularly harmful to the market
In these many advantages linked to FBA, the Italian regulator sees violations of Article 102 of the Treaty on the Functioning of the European Union. The amount of the penalty is justified by the fact that the action has harmed the market in a special way: Merchants had been deterred from taking up competing offers, which had further strengthened Amazon’s market power and thus further restricted competition in a market already dominated by Amazon.
In addition to the fine, the responsible authority, which according to the Reuters news agency has worked closely with the EU Commission in this case, has imposed conditions on Amazon for dealing with merchants who do not use FBA. From now on, these must receive the same benefits in terms of sales opportunities and visibility, provided they can meet the performance requirements that also apply to FBA merchants.
Amazon does not accept penalty
Amazon immediately announced that it had a fundamentally different take on the matter. In the meantime, the group has also confirmed that it will appeal and take action against the penalty imposed. The group also stated that more than half of the sales through its Italian marketplace are generated by small and medium-sized enterprises, which can sell their products through various channels. Amazon’s marketplace should therefore only be seen as one option among many, it said.
