Amazon under Italian Antitrust Authorities’ investigations for alleged abuse of dominant position
The multinational company is thought to have favoured sellers using its logistics services, granting them higher visibility and the possibility to ‘mitigate’ the effects of customers’ negative feedbacks
Italian Antitrust Authorities are investigating five subsidiaries of Amazon as they implemented actions that might be regarded as “abuse of dominant position”. As a matter of fact, the multinational e-commerce company is thought to have granted favourable conditions on its marketplace – i.e. higher visibility of their offers, with a consequent improvement of sales – to sellers using its logistics services.
The companies under preliminary investigation by the Italian Competition Authority (AGCM) are Amazon Services Europe Sàrl, Amazon Europe Core Sàrl, Amazon EU Sàrl, Amazon Italia Services Srl and Amazon Italia Logistica Srl.
The Authority’s officials carried out inspections in several headquarters of said companies with the help of the special Antitrust Team of the Italian Finance Police.
AGCM focused on the functioning of the marketplace and on the mechanisms governing offers, such as the A9 algorithm which, based on several factors, establishes the ranking of the various results of the researches carried out by customers on the website, and which also “exerts greatest influence on the sales of a product”. The Authority’s analysis focuses on Prime (the service providing rapid deliveries to annual subscribers) and BuyBox (allowing to purchase products with a single click) as access to these services “grants a significant, or even essential, advantage to sellers in order to beat competitors and increase their sales”.
According to the Antitrust Authorities, sellers using logistics services provided by Amazon (by joining the FBA – Fulfillment by Amazon – program) obtain better visibility and positioning compared to those who manage dispatches on their own, or through third parties.
AGCM drew said conclusions after a careful reading of the presentations and documents provided by the company to sellers. In fact, offers of “partner” sellers are displayed with the button “sent by Amazon” and classified as Prime in the search bar (therefore offered to users particularly inclined to make purchases), and they are thought to obtain positive feedbacks improving the seller’s performance ranking.
Moreover, according to Antitrust Authorities, in its offer Amazon points out that using its logistics services is an “effective solution in case the seller does not achieve positive sales performances on the website” because the subscription to this service would allow for the “cancellation of negative feedbacks related to deliveries/customer service”. Similarly, according to AGCM, FBA is thought to grant “price benefits”, “protection from negative feedbacks” and “improved indexing”.
In light of the operator’s dominant position (“more than half of Italian users looking for goods to purchase start their search from Amazon.it”, the report reads), Antitrust Authorities concluded that these conducts “allow Amazon to obtain significant competitive advantages in the logistics market, especially to the detriment of operators specialized in e-commerce logistics. In fact, by entrusting the management of its warehouse to a third-party logistics operator for the sales made through Amazon.com, a seller would loose the aforesaid advantages, which are not necessarily related to the efficiency and quality of the service”.
These are enough grounds to launch a preliminary investigation for an alleged “infringement of Article 102 of the TFEU (Treaty on the Functioning of the European Union)”. Jeff Bezos’ company – which declared to be “cooperating fully with the Authorities” – will be heard within 60 days.