Because in Italy the Antitrust has beaten Amazon
Antitrust fine of over 1 billion and 128 million euros to Amazon for abuse of dominant position
"Amazon has harmed competing e-commerce logistics operators in the first place by preventing them from proposing themselves to online sellers as providers of services of a quality comparable to that of Amazon logistics and such as to allow the best visibility on Amazon.it".
It is one of the charges on the basis of which the Antitrust has sanctioned Amazon for over 1 billion and 128 million euros for abuse of dominant position.
According to the Authority , Amazon has harmed competing operators in the e-commerce logistics service. Imposing behavioral measures on the group which will be subjected to scrutiny by a monitoring trustee.
Here are all the details.
The Italian Antitrust Authority has imposed a fine of over 1 billion euros (1,128,596,156.33) on the companies Amazon Europe Core S.à rl, Amazon Services Europe S.à rl, Amazon EU S.à rl , Amazon Italia Services Srl and Amazon Italia Logistica Srl for violation of art. 102 of the Treaty on the Functioning of the European Union.
Amazon holds a position of absolute dominance in the Italian marketplace brokerage services market, "which allowed it to favor its own logistics service, called Fulfillment by Amazon, so-called" FBA ", among sellers active on the Amazon.com platform to the detriment of competing operators in this market and to strengthen its dominant position ”, reads an Antitrust note.
According to the Authority, the companies have linked the use of the FBA service to access a set of essential benefits to obtain visibility and better sales prospects on Amazon.it. Among these exclusive advantages, the Prime label stands out, which allows you to sell more easily to the most loyal and high-spending consumers who are members of the homonymous Amazon loyalty program.
The Prime label also allows you to participate in the famous special events managed by Amazon, such as Black Friday , Cyber Monday, Prime Day and increases the likelihood that the seller's offer is selected as a Featured Offer and displayed in the so-called Buy Box. Amazon thus prevented third-party sellers from associating the Prime label with offers not managed with FBA, according to a press release from the Agcm.
The investigation has ascertained that these are functions of the Amazon.it platform that are crucial for the success of sellers and for increasing their sales. Finally, third party sellers using FBA do not have the stringent performance measurement system to which Amazon subjects non-FBA sellers and failure to pass which can also lead to the suspension of the seller's account.
In this way – it is written in the Agcm note – “Amazon has damaged competing logistics operators for e-commerce, preventing them from proposing themselves to online sellers as suppliers of services of a quality comparable to that of Amazon's logistics. These conducts have thus widened the gap between Amazon's power and that of the competition also in the e-commerce order delivery business.
Furthermore, as a result of the abuse, competing marketplaces have also been damaged: due to the cost of duplicating warehouses, sellers who adopt Amazon logistics are discouraged from offering their products on other online platforms, at least with the same. breadth of range ".
The Authority considered this abusive strategy to be particularly serious and, also in consideration of its duration, the effects already produced and the size of the Group, decided to impose the aforementioned fine of over 1 billion euros. Furthermore, in order to immediately restore competitive conditions in the relevant markets, the Authority has imposed behavioral measures on Amazon that will be subjected to the scrutiny of a monitoring trustee. Amazon must grant all sales and visibility privileges on its platform to all third-party sellers who know how to respect fair and non-discriminatory standards for fulfilling their orders, in line with the level of service that Amazon intends to guarantee Prime consumers. Amazon will have to define and publish these standards and, starting one year from the decision, refrain from negotiating with the carriers and / or competing logistics operators – on behalf of the sellers – rates and other contractual conditions applied for the logistics of their orders on Amazon.it, outside of FBA.
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SUMMARY OF THE AGCM PROVISION ON AMAZON
The Italian Antitrust Authority has imposed a fine of over 1 billion euros (1,128,596,156.33) on the companies Amazon Europe Core S.à rl, Amazon Services Europe S.à rl, Amazon EU S.à rl , Amazon Italia Services Srl and Amazon Italia Logistica Srl for violation of art. 102 of the Treaty on the Functioning of the European Union.
Amazon holds a position of absolute dominance in the Italian marketplace brokerage services market which has allowed it to favor its own logistics service, Fulfillment by Amazon (FBA), among the sellers active on the Amazon.it platform to the detriment. of the logistics services offered by competing operators in this market, and also to strengthen its dominant position.
DOMINANCE
The investigation showed that – on the basis of indicators that make it possible to appreciate the market power of a company in two-sided markets, such as that of marketplaces that cater to both sellers and consumers – in 2019 the market share of Amazon was up to 5 times that of its closest competitor, and that gap has widened dramatically over the past four years.
In particular, in 2019 Amazon achieved over 75% of the total revenue generated by marketplaces from offering brokerage services to third-party sellers.
In the same year, over 70% of the total value of sales of products from third party sellers on marketplaces in Italy took place on Amazon.it.
Amazon is also the undisputed leader in terms of popularity among consumers and sellers.
Between 2016 and 2019:
– the number of monthly consumer visits went from around 80 million in 2016 to over 220 in 2019 (in the same period, the value of eBay.it went from 40 to 50 million);
Total number of monthly visits of the top 5 marketplaces
– the number of unique users who visited Amazon.co.uk every month has doubled and has risen, on average, from 12 to 24 million; eBay.it only reached the monthly audience level that Amazon.it had in 2016 in 2019;
– lastly, the number of consumers who made at least one purchase on Amazon.it in the year was, again in 2019, well above 10 million (with an increase of over 60% from 2016) while, in the same period , that of eBay.it fell by over a fifth.
The unparalleled market power of Amazon is therefore undisputed with regard to all the other "players" of the market: the Company enjoys substantial independence in defining its behavior with respect to competitors (marketplaces), customers (retailers) and, lastly, consumers.
Nor is Amazon's dominant position contestable by competing operators in the medium term: network effects (the importance and value of Amazon.it increase as the number of consumers and sellers who use the platform increases), recognition of the brand and consumer loyalty programs (Prime, the best known consumer loyalty program in the world, has more than 7 million subscribers in Italy), constitute significant barriers to the entry and expansion of new operators, making it impossible for a new marketplace to attract, in a limited period of time, a number of sellers and consumers such as to reach a size sufficient to constitute an effective alternative to Amazon.
CONDUCT
Amazon has linked the use of the FBA service to access a set of essential benefits to gain visibility and better sales prospects on Amazon.co.uk.
Amazon prevents third-party sellers from associating the Prime label with offers not managed with FBA.
The Authority's investigation has ascertained that these are functions of the Amazon.it platform that are crucial for the success of sellers and for increasing their sales.
Among these exclusive advantages, the Prime label stands out, which allows you to sell more easily to the more than 7 million most loyal and high-spending consumers who are members of the homonymous Amazon loyalty program:
– in 2012 a Prime subscriber spent about a third more than a non-Prime subscriber in a year, in 2019 the average annual expenditure of Prime subscribers on Amazon.it was over 500 euros, more than double that of non-subscribers
– over 70% of this expenditure is for products with the Prime label.
In 2019, every 100 euro spent on Amazon.it was more than 70 spent by Prime users, more than 60 related to a Prime product, of which more than half sold by third-party retailers.
The Prime label also allows you to:
participate in popular Amazon managed special events, such as Black Friday, Cyber Monday, Prime Day
i) which attract – on average – a third of visitors more than a "normal" day of the same month, with peaks of over 60% more on Black Fridays
ii) where the number of consumers who purchase at least one product is more than three times the daily average of the month;
increase the probability of obtaining the Buy Box: in 2019 over two-thirds of the total sales made by third-party sellers on Amazon.co.uk concerned "Featured Offers" in the BuyBox, of which over 60% consisted of products with the Prime label ( and then managed with FBA).
Additionally, third-party sellers using FBA do not have the stringent performance measurement system that Amazon subjects non-FBA sellers to and failure to pass can also lead to the suspension of the seller's account.
Finally, the Authority considered that the seller-managed Prime program – recently introduced by Amazon for sellers who aspire to the Prime label but do not want to use Amazon's fulfillment services – does not represent a valid stand-alone alternative to FBA given its role. pervasive that Amazon continues to carry out in the intermediation between sellers and logistics operators, defining delivery rates and conditions.
The Authority therefore considered the obligation to use Amazon as an intermediary to negotiate with other logistics operators to be restrictive, imposed on sellers who want to benefit from Prime by using a logistics service other than Amazon's, even though equally efficient.
EFFECTS
In this way, Amazon has damaged, in the first place, competing e-commerce logistics operators, preventing them from proposing themselves to online sellers as providers of services of a quality comparable to that of Amazon logistics and such as to allow the best visibility on Amazon. .it.
These conducts have thus increased the gap between Amazon's power and that of the competition also in the e-commerce order delivery business, where even the main operators end up being confined to the role of Amazon's subcontractors.
Furthermore, as a result of the abuse, competing marketplaces have also been damaged: due to the cost of duplicating warehouses, sellers who adopt Amazon logistics are discouraged from offering their products on other online platforms, at least with the same. breadth of range.
The abusive strategy sanctioned by the Authority, in many ways similar to what is now called self-preferencing (ie I privilege my logistics service even when that of my competitors can be just as efficient), has allowed Amazon to:
– increase the percentage of third-party orders handled with FBA, from less than 30% at the beginning of 2016 to more than 80% at the end of 2019;
– manage, in 2019, the delivery of over 150 million e-commerce parcels, equal to over 60% of the total parcels generated by online sales in Italy, compared to just over 20% in 2016; over 60% of the e-commerce parcels managed by Amazon in 2019 were delivered directly using the Company's distribution network, through the program of agreements with local carriers (Delivery Service Providers);
Volume of e-commerce parcels handled by Amazon
– consolidate its dominance in the Italian marketplace brokerage services market where the Company's share exceeded 70% in 2019.
An absolutely anomalous growth that brings out concrete risks of monopolization and which, even more than being based on efficiency, takes advantage of the possibility, which cannot be replicated for other operators, to condition the visibility of retailers on the marketplace (through the Prime label) to choice of logistics operator.
NOTICE, PENALTY and MEASURES
The Authority considered Amazon's abusive strategy to be particularly serious and, also in consideration of its duration, the effects already produced and the size of the Group, it decided to impose a SANCTION OF MORE THAN ONE BILLION EURO.
Furthermore, in order to immediately restore competitive conditions in the relevant markets, the Authority has imposed behavioral measures on Amazon that will be subjected to the scrutiny of a monitoring trustee.
Amazon must grant all sales and visibility privileges on its platform to all third-party sellers who know how to respect fair and non-discriminatory standards for fulfilling their orders, in line with the level of service that Amazon intends to guarantee Prime consumers.
Amazon will have to define and publish these standards and, starting one year from the decision, refrain from negotiating with competing carriers and / or logistics operators – on behalf of the sellers – rates and other contractual conditions applied for logistics. of their orders on Amazon.it, outside of FBA.
More specifically, the Authority has provided that Amazon:
a) defines and publishes on Amazon.co.uk subjective requirements and fair and non-discriminatory standards for order fulfillment – relating to the preparation and delivery phases – required by third-party sellers to qualify their offers to the Prime program;
b) modify the current configuration of the Seller Fulfilled Prime program by providing only for the qualification of third party sellers;
c) qualify all third party sellers on Amazon.co.uk that qualify and are able to meet the fair and non-discriminatory standards referred to in letter a) to the Seller Managed Prime program;
d) grants Prime benefits, or additional advantages that may be introduced in the future, to the offers of third-party sellers included in the Vendor Managed Prime program, equating them in every aspect to offers managed through the Fulfillment by Amazon Network;
e) within one year of the adoption of the provision, refrain from any form of intermediation and direct management of the commercial relationship between the sellers and the warehouse and / or distribution logistics operators chosen by the sellers for the management of the offers included in the Prime program Managed by the Seller, leaving the definition of the terms and conditions of the contract to the direct negotiation between the parties;
f) applies the process of monitoring compliance with the standards required for the assignment of the Prime label in a uniform manner to the offers managed through the Fulfillment by Amazon Network and to those included in the Prime program Managed by the Seller, for the purpose of maintaining the Prime benefits;
g) requests from the sellers adhering to Prime Managed by the Seller and from the market operators used by them for the fulfillment of their orders the only information strictly necessary for the tracking of orders and the monitoring of the required standards;
h) gives full information to third-party sellers of the fact that the offers managed through the Fulfillment by Amazon Network and those included in the Prime Managed by the Seller program are subject to compliance with the same set of standards and, therefore, to the same treatment in the event of non-compliance of the same;
i) guarantees adequate advertising, on its Amazon.co.uk platform and in its communication campaigns, to the Prime program Managed by the Seller;
j) apply the sales performance monitoring process uniformly to all offers on Amazon.it, giving full information to sellers;
k) delegates to a trustee the verification of compliance with the conditions set out in the previous points.
Rome, December 9, 2021
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-in-italia-lantitrust-ha-bastonato-amazon/ on Thu, 09 Dec 2021 08:01:06 +0000.