Amazon fined $1.28 billion for abusing market dominance

[view original post]

Amazon was fined 1.13 billion euros ($1.28 billion) on Thursday by Italian antitrust regulators for abusing its market dominance.

The Autorità Garante della Concorrenza e del Mercato, or AGCM, said that Amazon had harmed competing operators in the e-commerce logistics service.

It concluded that Amazon leveraged its dominant position to encourage sellers on Amazon.it to use its own logistics service, Fulfillment by Amazon.

This was done “to the detriment of the logistics services offered by competing operators, as well as to strengthen its own dominant position.”

The concern for investors is that the Italian fine could signify a broader trend toward regulating Amazon more heavily in other parts of its business.

AGCM said it will impose corrective steps that will be subject to review by a monitoring trustee.

Amazon said it “strongly disagrees” with the fine and that it plans to appeal. “The proposed fine and remedies are unjustified and disproportionate,” an Amazon spokesperson told CNBC.

Amazon said over 50 percent of all annual sales on its platform in Italy come from small- and medium-sized business, adding that their success is key to Amazon’s business model.

“Small- and medium-sized businesses have multiple channels to sell their products both online and offline: Amazon is just one of those options,” the Amazon spokesperson said.

“We constantly invest to support the growth of the 18,000 Italian SMBs that sell on Amazon, and we provide multiple tools to our sellers, including those who manage shipments themselves.”

Ruhell Amin, global head of retail equity research at William O’Neil + Co, told CNBC’s “Street Signs Europe” on Thursday that it’s a “significant” fine for the e-commerce giant.

“It’s part of a broader trend that we’ve seen in Europe around trying to regulate some of these Big Tech companies,” he said.

The concern for investors is that the Italian fine could signify a broader trend toward regulating Amazon more heavily in other parts of its business as well, and in other parts of the world, Amin said. “This certainly seems like the tip of the iceberg,” he said.

“This case is interesting because the European Commission opened its own probe into this practice but carved Italy out of the scope of the investigation to allow Italy’s antitrust watchdog to proceed on its own merit,” Amin added. “Typically, the European Commission is quite unified in its approach.”

Elsewhere, regulators in China are cracking down on e-commerce giant Alibaba, while Latin American regulators are targeting Mercado Libre.