Amazon on Thursday was fined nearly $1.3 billion by Italian regulators who accused the company of breaking antitrust laws by giving special perks to third-party merchants who use Amazon’s warehouse and delivery system.
The decision by the Italian Competition Authority is one of the first instances of a regulator investigating how Amazon uses the combination of its vast logistics network and online marketplace to gain an advantage over competitors.
The regulator said Amazon gives merchants who pay to use the system, called Fulfillment by Amazon, enticements like access to Amazon Prime customers, meaning their products can often be shipped within 24 hours without delivery fees. The vendors also can participate in promotions like Black Friday, Cyber Monday and Prime Day that are not available to those who do not use Amazon’s fulfillment system.
“The investigation found that these are functions of the Amazon.it platform that are crucial for the success of sellers and for increasing their sales,” the competition authority said in a statement.
Most of the products available on Amazon are offered by outside vendors who use Amazon’s site as a marketplace to reach customers. Amazon takes a percentage of each sale. For an additional cost, the company offers Fulfillment by Amazon, which allows vendors to store their products in Amazon’s warehouses and delivery system, as well as programs for inventory management, returns and customer service.
Amazon said it would appeal the ruling. Fulfillment by Amazon is an optional offering, the company said, and a majority of third-party merchants selling products on Amazon do not use the company’s logistics system. The company said there are other methods for outside vendors to reach Prime customers other than Fulfillment by Amazon.
“We strongly disagree with the decision of the Italian Competition Authority,” the company said. “The proposed fine and remedies are unjustified and disproportionate.”
Amazon has invested heavily in Italy, where shopping online grew during the pandemic after not been as common as other markets like the United States, Britain or Germany. In Italy, Amazon has built fulfillment warehouses and other parts of its logistics system to help draw customers with speedy delivery.
In addition to the fine, Italian regulators said Amazon must give outside vendors who don’t use Fulfillment by Amazon access to the same sales and visibility opportunities, if they use a logistics operator that meet certain standards. Amazon has a year to come up with standards that outside logistics companies must meet to qualify.
Amazon has become a frequent target of antitrust authorities. The European Commission, the executive arm of the European Union, is investigating Amazon for unfairly using data collected from third-party merchants to bolster its own product offerings.
Last month, Italian regulators fined Amazon and Apple more than $225 million total for anti-competitive cooperation related to the sale of Apple and Beats products on Amazon. The companies said they would appeal.