Amazon has been fined $1.2 Billion in one of the largest and most controversial fines ever handed out by any European regulator. The retail behemoth has also been accused of abusing its position in the European market in what could be a landmark case. What does this mean for the future of Amazon?
Antitrust regulators were specifically looking into Amazon’s abuse of power to get a larger share of the logistics market across Europe. The investigation found that Amazon was being harmful in how it operated.
Amazon’s shipping services have continued to expand along with huge demand in Europe. In much of mainland Europe and the UK, Amazon offers one-day Prime delivery, and the pressure is on to meet those tough deadlines.
Amazon tried to encourage local businesses to launch full logistics companies with the exclusive goal of transporting freight for the retailer. They promised exclusive benefits to any companies who took up this offer, and this has been deemed a violation by the regulator.
“Amazon holds a dominant position in the Italian market for intermediation services on marketplaces, which Amazon leveraged to favor the adoption of its own logistics service,” said the statement from the Antitrust regulator.
It was 2019 when the AGCM (the Italian Competition Authority) first started its investigations, sharing a press release explaining the situation:
“Amazon would grant improved visibility of the seller’s offerings, higher search rankings and better access to consumers on Amazon.com only to third-party sellers that subscribe to “Amazon Logistics” or “Fulfillment by Amazon” (FBA), putting other third-party merchants at a disadvantage. Such practice seems to be outside competition on the merits as the benefits are not necessarily related to the efficiency and quality of the service provided by the seller and are only based on its subscription to Amazon’s FBA ("self-preferencing").
This isn’t the only case that Amazon is having to answer. Earlier in 2021, the company was given a fine of around $800 million for violating data protection laws in Europe. This is related to the General Data Protection Regulation, and the fine was issued in Luxembourg, the country that heads up Amazon’s European regulations.
In the aftermath, it also seems that the United Kingdom and Germany are exploring antitrust issues with the company, their sales, and how they process peoples’ data.
In November, Amazon lost out on an appeal to stop the European courts from simultaneously running probes into the firm and how sellers are treated on the platform.
The EU is thought to be closely examining the famous “Buy Box” on Amazon, which is where 80% of the sales on the platform are driven from. There is also debate about the Prime program and the free delivery options, and whether this unfairly favors sellers with links to Amazon Italy’s logistic solutions, which could amount to another perceived abuse of power.
The Italian regulator also addressed the treatment of third-party sellers, and demanded that changes were made “to grant 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 fulfillment of their orders.”
Amazon is set to appeal against the Italian regulator’s findings. A statement from Amazon explained it “strongly disagrees with the decision of the Italian Competition Authority” and found that “the proposed fine and remedies are unjustified and disproportionate,” so it is fair to say that an appeal is coming.
This appeal could be about far more than the money lost in the Amazon antitrust case, which amounts to €1.13 billion, or roughly $1.2 Billion. The precedent that has been set by the Italian body means that a failed appeal could lead other countries, and the European Union, to take further action.
There is a raft of fines being issued at the moment, and recently, Apple was fined by the same Italian Watchdog for “Anti-Competitive Cooperation With Amazon”. Companies need to be cautious about how they are dealing with their business and whether they are allowing for fair competition. In fact, congress started the process of updating the antitrust laws in 2021, with a view to a more modern focus on digital platforms. Could this be paving the way for legal action?
Many companies have rules and regulations regarding “monopolizing”. A look at the US Antitrust laws can lead to some questions about whether or not Amazon could be accused of abusing its position. If this is found to be the case, similar fines could be issued, though this is all a matter of conjecture at this point.
Along with the updates from congress, and the fact that countries in the EU are currently taking action against Amazon, it seems that there could be similar action in the U.S.
However, speaking to Adweek, Gary Kibel, a digital media and privacy lawyer stated that Amazon may adjust the way they operate: “Oftentimes, the outcome of a regulatory action is corrective measures or a change in practices.”
After being told in no uncertain terms by the Italian regulators that they would have to make changes to their logistics and the “Buy Box” then it could be that Amazon sufficiently alters its practices to discourage legal action and fines.
Though it seems unfathomable to most of us, the fines that Amazon Italy received in recent months are actually something of a drop in the bucket. Amazon can handle it. However, if these fines were to form a trend and continue to spread to markets like the UK and the United States then the brand could be damaged.