Amazon has received a record fine of 1.13 billion euros by Italian market authority AGCM. The ecommerce giant’s logistics service Fulfilment by Amazon has abused its market dominance and disadvantages competitors too greatly, according to the regulator.
Fulfilment by Amazon (FBA) is a service offered to partner sellers on the platform. Merchants can send their products to Amazon’s warehouses and the company will take care of the fulfillment process, including returns and customer service. According to Italian authority AGCM, the service by Amazon has violated competition rules in the European Union.
Non-FBA sellers are harmed
Amazon greatly disadvantages third-party merchants that do not use their logistic branch FBA, the market authority finds. Sellers that organize their own fulfillment do not receive certain benefits, such as increased visibility on the site and access to its Prime label. In this way competitors are being harmed, AGCM says, calling Amazon’s conduct ‘particularly serious’.
Competitors are being harmed, AGCM says.
The Italian regulator also plans to impose corrections to combat the wrongdoing, and the company will be monitored.
Amazon: ‘Sellers do not have to use FBA’
In a statement, Amazon says they ‘strongly disagree’ and intend to appeal the decision, adding that sellers are not obligated to use their FBA-services: “Small and medium-sized businesses have multiple channels to sell their products both online and offline: Amazon is just one of those options.”
‘SMEs have multiple channels to sell products, Amazon is just one of them.’
Last year Amazon had a record year, generating a revenue of over 340 billion euros, an increase of almost 40 percent. Net profits were also up more than 80 percent compared to the year before.
Highest fine for Amazon in Europe
The billion euro penalty is the highest fine the ecommerce company has received in Europe to date. Only last month, Amazon was fined almost 70 million euros in Italy alongside Apple, which was penalized with over 130 million euros. The previous fine was aimed at an unfair cooperation of the two tech giants for their sale of Apple products.