Italy: A Fine Day For Big Tech

Amazon gets hit with a $1 billion fine by the Italian government for anti-competitive practices.

Italy’s competition authority (Autorita’ Garante della Concorrenza e del Mercato, or AGCM) fined online retail behemoth Amazon $1.3 billion for allegedly abusing its dominant market position and pushing third-party sellers to use the company’s logistics service, Fulfillment by Amazon (FBA).

Its decision is in line with the trend among the European Commission and other European national competition authorities of fighting global tech companies that they perceive as dominant. It’s therefore very harsh in terms of fines and behavioral injunctions, according to Natasha Tardif, managing partner at Reed Smith’s Paris office and co-head of the legal firm’s Competition and European Law department.

“Authorities multiply investigations and high fines against global tech companies,” says Tardif. “There was a June decision against Google in France. And there is an ongoing investigation by the European Commission against Amazon, where they are looking at various services that are either vertically integrated or related, and where the competition authorities suspect they are using their dominance in certain markets to leverage their power on another market to favor their services.”

The French Competition Authority fined Google for favoring its tools for buying and selling advertisements online, which it alleges constitutes abuse of a dominant position. The AGCM argues that by excluding sellers that don’t use FBA from Amazon’s Prime category—and excluding them from large online sales event deals, such as Black Friday, Cyber Monday and Prime Day—Amazon is also using a dominant position to favor the adoption of its own logistics service.

Unlike the French case, where Google agreed not to question or dispute the facts and settled the case with commitments that went further than expected, Amazon has come out fighting and plans to dispute the decision, which it says is not true.

“The fine is enormous,” states Tardif. “Amazon is saying the AGCM’s representation is a distortion of its business model: that it did not tie any of their services to impose part of them on their marketplace merchants, and that many of the sellers actually do not use the FBA. If this is confirmed before the court of appeal, the AGCM’s case may not be sustained.”