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Italy fines Amazon and Apple $230M over alleged reseller collusion

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Amazon and Apple have been hit with almost $230 million (€203 million) in total fines by Italy's antitrust authority -- following an investigation into reselling of Apple and (Apple-owned) Beats kit on Amazon's Italian e-commerce marketplace.

The authority says the alleged collusion decreased the level of discounts available to consumers buying Apple and Beats products on the Amazon Italy marketplace.

It has also ordered the tech giants to end the restrictions on resellers.

The AGCM announced the sanction today, saying its probe identified a restrictive agreement between the pair to block some "legitimate" resellers of Beats products on Amazon.it.

The fine breaks down into €134.5 million (~$151 million) for Apple and €68.7 million (~$77.3 million) for Amazon.

The agreement in question was signed between the pair back in October 2018.

Per the AGCM's press release, it found the agreement contained a number of contractual clauses that prohibited official and unofficial resellers of Apple and Beats products from using Amazon.it -- with the restriction limiting the sale of Apple and Beats products on Amazon.it to Amazon itself and a number of resellers the authority says were "chosen individually and in a discriminatory way" -- in violation of Article 101 of the Treaty on the Functioning of the European Union.

"[T]he investigation established the intention to introduce a purely quantitative restriction on the number of retailers, allowing only Amazon and certain subjects, identified in a discriminatory way, to operate on Amazon.it," it writes in the release [which we've translated from Italian with Google Translate].

"The terms of the agreement also restricted cross-border sales, as retailers were discriminated against on a geographic basis. The restrictions of the agreement have affected the level of discounts offered by third parties on Amazon.it, decreasing their size."

The authority notes that Amazon's local marketplace accounts for at least 70% of purchases of consumer electronic kit in the country, of which "at least 40% are represented by retailers who use Amazon as a brokerage platform".

"It therefore appears essential that the application of competition rules ensure a level playing field for all retailers who use marketplaces as an increasingly important place for carrying out their commercial activity, especially in today's context, avoiding the implementation of discriminatory behaviors that restrict competition," it adds.

"In this perspective, the Authority's decision recognizes, in line with the jurisprudence of the EU Court of Justice, the need for distribution systems, in order to be compatible with competition rules, to be based on qualitative criteria, not discriminatory and applied equally to all potential resellers."

The Italian authority further notes that, following its investigation into the Amazon-Apple agreement, national competition authorities in Germany and Spain subsequently initiated similar proceedings.

Spain's Comisión National de los Mercados y la Competencia announced a possible disciplinary proceeding against Amazon and Apple this summer -- opening its own investigation (which it said would take up to 18 months to complete).

While, back in 2018, Germany's Bundeskartellamt initiated an abuse proceeding against Amazon following complaints by sellers on its marketplace -- closing the proceeding the following year after Amazon amended its general terms of business for sellers and pledged additional changes to alleviate competition concerns.

More recently, following a major update to German competition law regarding digital platforms, the Bundeskartellamt now has open proceedings examining the market power of both tech giants -- and if it confirms their “paramount significance for competition across markets”, as the law puts it, the Federal Cartel Office will be able to apply ex ante measures to proactively impose conditions on how Amazon and Apple can operate in Germany to control the risk of market abuse.

The two tech giants were contacted for comment on the AGCM decision.

Amazon confirmed it will be appealing, sending the following statement, attributed to a spokesperson:

We strongly disagree with the decision of the Italian Competition Authority (ICA) and we intend to appeal. The proposed fine is disproportionate and unjustified.

We reject the ICA’s suggestion that Amazon benefits by excluding sellers from our store, since our business model relies on their success. 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.

Amazon also sought to claim the agreement it inked with Apple was good for consumers -- leading to an increase in the volume of Apple products available for them to buy on its marketplace and highlights individual instances where discounts had been applied to some Apple products.

Amazon also sought to deny any kind of market dominance, saying its marketplace represents less than 1% of the global retail market and that there are larger retailers in every country in which it operates, including Italy -- arguing that businesses have multiple channels to sell Apple products, both on and offline.

It added that third-party sellers account for circa 60% of sales on its marketplace, including around 18,000 Italian SMEs it said sell on Amazon.

Apple also sent a statement confirming it will appeal, writing:

We work hard to create the best products in the world with a great user experience. For the safety of our customers and the integrity of the products they buy, it's important they know they’re purchasing genuine products. Non-genuine products deliver an inferior experience and can often be dangerous. 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. We respect the Italian Competition Authority but believe we have done nothing wrong and plan to appeal.

This report was updated with Apple's response; and with a correction -- Apple actually has the larger fine (€134.5M) and Amazon the smaller (€68.7M), rather than the other way around as we originally misstated

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