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Italy’s antitrust watchdog accuses Apple and Amazon of colluding to cut off reseller access

Both tech giants plan on appealing the fine imposed for flouting the EU’s competition law.

Italy’s antitrust authority has fined Apple and Amazon over $227 million for colluding to violate the country’s competition rules. In its announcement on November 23, the Italian Competition Authority said that it had found that certain clauses in the two companies’ contract, signed in October 2018, violated antitrust laws by restricting sales of Apple-owned Beats products to certain sellers, limiting cross-border sales, etc.

Out of the $227 million fine, Apple will be liable to pay $77 million while Amazon will have to cover the rest ($150 million).

The ICA’s decision finds relevance closer home where the Competition Commission of India (CCI) is investigating Amazon over allegations of preferential treatment to certain large sellers. India’s e-commerce rules (both the new draft and the older rules) prohibit e-commerce platforms from giving special treatment to any retailer.

Key points raised in the ICA’s sanction

In a press release, the ICA noted the following points:

  • Violation of laws: The companies’ 2018 agreement violated Article 101 of the Treaty on the Functioning of the European Union (TFEU), the ICA held. The article deals with anti-competitive practices in Italy.
  • Profiting off discounts: Through their agreement, Amazon and Apple decreased the amount of discounts offered by third-party sellers on its site, the ICA said. In its investigation, it found that the agreement had certain clauses which prohibited official and unofficial resellers from using Amazon Italy to sell Apple and Beats products; instead, restricting it to certain sellers chosen by Amazon.
  • Amazon’s dominance in Italy: At least 70% of electronics purchases in Italy are done on Amazon, out of which 40% are “represented by retailers who use Amazon as a brokerage platform”, the ICA said to back its claim that Amazon’s practices were restrictive.

Amazon and Apple respond

Both companies have said that they will appeal the authority’s decision and have defended their 2018 agreement, according to reports.

Amazon’s contestations

  • Agreement benefited consumers: “As a result of the agreement, Italian customers can find the latest Apple and Beats products on our store, benefiting from a catalogue that more than doubled, with better deals and faster shipping,” an Amazon statement said, according to TechCrunch.
  • Denying market dominance: Amazon also said that Italy has larger retailers and multiple offline and online channels to sell Apple’s products. It also contested its global dominance, telling Techcrunch, that it comprised less than 1% of the global retail market.
  • On third-party sellers: “We reject the ICA’s suggestion that Amazon benefits by excluding sellers from our store, since our business model relies on their success,” Amazon said. It said that 60% of its sales come from third-party sellers, which includes 18,000 Italian small and medium enterprises.

Apple’s contestation

“To ensure our customers purchase genuine products, we work closely with our reseller partners and have dedicated teams of experts around the world who work with law enforcement, customs and merchants to ensure only genuine Apple products are being sold,” the company said in a statement to TechCrunch, denying any wrongdoing.

India’s investigation into Amazon’s antitrust issues

The CCI is currently investigating Amazon and Flipkart for allegedly promoting preferred sellers on their websites and prioritising some seller listings, among others.

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The probe into Amazon was launched based on a complaint from Delhi Vyapar Mahasangh (DVM), a group of MSME (Micro, Small and Medium Enterprises) smartphone traders, who alleged that Amazon maintains certain agreements with sellers (allegedly controlled by the company) and gives these sellers unfair preferential treatment. Other trade bodies have also since filed similar complaints of anti-competitive practices against Amazon.

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I cover health technology for MediaNama, among other things. Reach me at anushka@medianama.com

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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