Amazon FBA

The Italian Competition Authority (ICA) has fined the Amazon group more than EUR 1 billion for abuse of a dominant position for having favoured – through a conduct attributable to ‘self-preferencing’ – its own logistics service, called Fulfilment by Amazon (FBA), with sellers active on the Amazon.it platform to the detriment of competing operators in the relevant markets.

According to the ICA, Amazon has anchored to the use of the FBA service the access to a set of benefits essential for gaining visibility and better sales prospects on Amazon.it.

Prominent among these is the Prime label, which facilitates the sale of products  to consumers registered in the loyalty program bearing the same name. The Prime label also allows to participate in special events run by Amazon (Black Friday, Cyber Monday, Prime Day) and increases the likelihood that the seller’s offer will be selected as a “Featured Offer” and displayed in the so-called Buy Box. By doing so, Amazon has, at least at an early stage, prevented third-party sellers from attaching the Prime label to offers not operated with FBA.

By its anticompetitive conduct, Amazon has harmed:

1. Competing e-commerce logistics operators, by preventing them from offering their services to Amazon sellers wishing to take advantage of the benefits associated with the FBA programme, or by requiring them to provide their services in a ‘compliant’ manner with Amazon’s logistics;
2. Competing marketplaces, with sellers using Amazon’s logistics who are discouraged from offering their products on other online platforms so as not to duplicate storage costs;
3. Sellers who have subscribed to the FBA programme, as the strategy adopted by Amazon has limited their freedom of choice as to the logistics operator best suited to their business needs;
4. Third-party sellers that did not subscribe to the FBA programme, who suffered the competitive disadvantage resulting from the worse conditions in terms of visibility associated with not subscribing to the programme proposed by Amazon;
5. Consumers, as the introduction of the FBA programme drove consumers to buy products they would not necessarily have chosen in a truly competitive market.

The ICA’s measure is not yet final, in fact Amazon has  appealed the decision before the administrative judge.

Delex’s Antitrust Law Team is monitoring the case, has already held initial talks with a number of parties potentially harmed by Amazon’s conduct and, through an important firm of economists , has begun investigations to quantify the damaging effects of Amazon’s conduct on the market.