Amazon (Nasdaq: AMZN) hit the headlines for the wrong reasons yesterday after Italy’s competition monitoring authority slapped a fine of €1.13 billion (~$1.28 billion) on the e-commerce giant. According to the Italian Competition Authority (AGCM), Amazon was fined for activities that caused a negative impact on competing businesses offering e-commerce logistics services. The stock lost 1.13% or $39.74 to close at $3,483.42.
Additionally, the AGCM noted that Seattle, Washington-based Amazon has implemented measures to strengthen its own logistics operations, referred to as ‘Fulfillment by Amazon,’ in order to further bolster its standing of total domination at the expense of rival businesses. The market competition governance authority treated the initiative of Amazon as a deliberate tactic employed to rout out competitors.
The penalty, the newest in a slew of antitrust rulings against large technology corporations in Europe, arises from an investigation that established Amazon of linking its own shipping service to benefits like Amazon Prime, which boosts online exposure for products and other services.
Third-party merchants who did not employ Amazon’s logistics service were consequently denied access to Amazon Prime and other benefits that were critical to increasing their online exposure and likely sales, according to the Association of AGCM. Rival e-commerce platforms were also hurt, according to AGCM, since merchants who utilize Amazon’s logistics service are discouraged from marketing their items on other platforms because of the high warehousing expenses. Therefore, the watchdog has directed Amazon to provide all the available sales and visibility rights to third-party vendors.
Regarding the fine, Amazon issued a statement saying that it profoundly disagrees with the judgment of the Italian Competition Authority, and intends to file an appeal with the European Court of Justice. According to the company, the suggested penalties and remedial measures are unreasonable and excessive compared to the harm they would cause.
The ruling arrives weeks after the AGCM fined Amazon and Apple Inc. a total of over $225 million, alleging that the companies conspired to remove genuine resellers of Apple and Beats audio gadgets from Amazon’s Italian marketplace.
Notably, back in July, Amazon was ordered to pay a fine of €746 million by a European Union privacy watchdog for irregularities in advertising. This was the highest penalty under the EU’s data protection rules.
The news of €1.13 billion fine is expected to keep the stock of Amazon range-bound in the short term.
The historical price chart indicates that the stock of Amazon is declining after forming a near double top at 3700 levels. The share price has also formed a negative divergence with the stochastics indicator. Therefore, we are anticipating the stock to remain in a downtrend in the short term.
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