Antitrust heavily sanctions Amazon

We report a recent decision of the Autorit’Garante della concorrenza e del Mercato rendered in the meeting of November 30, 2021 against the e-commerce giant Amazon (more in detail, Amazon Europe Core S.à r.l., the group company responsible for managing the websites of Amazon's European marketplaces and owner of the Internet domain www.amazon.it)., as well as some companies of the same Group (Amazon Services Europe S.à.r.l., Amazon EU S.à.r.l., Amazon Italia Services S.r.l., Amazon Logistica S.r.l.), which presents profiles of great interest.

The ruling in question è intervened at the conclusion of a proceeding initiated in relation to an alleged violation of Art. 102 of the Treaty on the Functioning of the European Union, a rule that - it should be recalled – prohibits the exploitation/l’abuse of a dominant position in the internal market, and which also provides, by way of example and not exhaustively, a’list of practices constituting the expression of such abuse.

In the case at hand, the interest from the decision is not only limited to the very narrow topicality of the matter (taking into account the fact that e-commerce has been showing a strong growth trend for several years now and that, as a result of the pandemic, the sector has literally “exploded”), but also in that it allows us to analyze the issue of abuse of a dominant position from a very peculiar angle.

In fact, specifically, the particularity of the case submitted to the Authority’s assessment lies in the fact that the conduct challenged against the multinational (and which led to the imposition on it of a heavy sanction, as will be better seen) did not move on the “immediate” level of the goods being marketed (and of the direct relationship between Amazon itself and its buyers), but rather on the logistics side.

More in detail, the AGCM found an abuse of a dominant position in the fact that Amazon had favored, among sellers on the platform, its own logistics service (called FBA – Fulfillment by Amazon), over other competitors operating in the e-commerce logistics sector, and moreover, by doing so, had further strengthened its dominant position.

Getting down to a concrete analysis of the censured conduct, in detail, the multinational company proposed to sellers a series of advantages that were essential for them to be able to acquire greater visibility on the Amazon marketplace (as well asé greater prospects and sales opportunities), reserving them only for those sellers who, among the various options in terms of logistics, had chosen to make use of Amazon's logistics service, i.e. FBA; among these advantages, for example, was the possibility of making venue for the sale of their products through the well-known Amazon Prime channel, which is used by consumers who are not only more loyal, but also more willing to spend large amounts on their purchases. In other words, in such a structured system, only those sellers who had chosen Amazon's logistics service (FBA), to the exclusion of other couriers, would have been able to join the Prime service and its related initiatives; to make it clearer, the inability to join Prime had for those sellers the consequence of “cutting them off” from Amazon's special events (well known to the general public), such as Black Friday, Cyber Monday, Prime Day etc. – and their products would not be displayed among the featured deals on Amazon's website.

Furthermore, if for logistics service operators Amazon routinely applies a very stringent performance measurement system (so much so that failure to exceed the set parameters can lead to the suspension of the seller’s account), FBA operators, on the other hand, are an exception, who eschew this stringent form of monitoring.

The result of such a policy practiced for a long time by the multinational company (duly highlighted by the reported decision) è easily intuitable: logistics operators other than FBA were not able to propose their services as comparable (in terms of quality) to the logistics service provided by Amazon (FBA), with the consequence of increasing the gap between Amazon's power and that of its competitors, not only in relation to the marketplace proper, but also in relation to product delivery.

Therefore, having clarified that the Authority has held Amazon responsible for the ascribed conducts, the sanction imposed in the present case is certainly characterized by its particularly significant amount, given that the e-commerce giant è has been sentenced to pay a sum in excess of one billion euros, a choice determined on account of the particular gravity of the conduct found by the AGCM (both in terms of duration and effects already produced on competition), as well as in view of the size of the Group.

The above economic sanction is accompanied by the imposition on Amazon of behavioral obligations, subject to monitoring activities (by a monitoring trustee), in order to restore competitive conditions in the market with immediate effect. Specifically, the multinational company è has been ordered to adopt a series of measures “through which a system of equal treatment of all offers on the platform is achieved, which does not depend on the logistics operator chosen by the third-party seller to fulfill its orders. …” i.e., to set in advance its own order fulfillment standards for sellers (which are fair and non-discriminatory), while also providing for the publication of such standards, as well as refraining from negotiating with competing logistics operators on the conditions for orders placed on the Amazon marketplace.

In conclusion, it should be noted that conduct that is not permitted for the purposes of so-called antitrust law can also move on planes with less immediate visibility, but that, not for this reason, they can equally be capable of producing heavy distorting effects on competition.

Finally, it should be noted that, again in recent times, there have been further condemnations by the AGCM (albeit for amounts in no way comparable to the sanction given to Amazon), whereby the Authority has imposed sanctions for business practices deemed unfair in the field of e-commerce, and which would appear to have been accentuated in the period of the Covid- 19 pandemic.

These are, in particular, the publication of inaccurate and misleading information on prices, actual availability and delivery times of products sold online, as well as unjustified charges prior to the conclusion of the contract or cancellation of consumer orders, as well as inefficiencies in relation to the delivery of products and failure or insufficient after-sales assistance to consumers (including with reference to requests for reimbursement from buyers). In this sense, fines (for conduct differentiated for each company) have been imposed on “colossi” such as Unieuro, Mediaworld (Mediamarket), Leroy Merlin and Monclick, for a total amount of almost eleven million euros.