The antitrust investigators in Italy found that Amazon had given unfair preference to sellers who also ship their goods through the company.
Amazon tried to stop the case in Italy because it was facing a parallel investigation in the same area. The European General Court in Luxembourg dismissed its attempt.
Italy's competition regulator said on Thursday that Amazon had been more cautious in applying performance criteria, which can lead to merchants being suspended if they pay for Amazon to ship their parcels.
The Italian Regulator said that Amazon had damaged e-commerce logistics competitors that could not offer the same benefits as Amazon.
The watchdog said that Amazon has to give equal treatment to sellers that use their own carriers and sellers that use the Amazon carrier services.
The Italian authority will be allowed to carry out its own investigation over concerns that Amazon might be artificially favoring its own retail offers and offers of marketplace sellers that use Amazon's logistics and delivery services.
Amazon said it would challenge the decision.
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The proposed fine and remedies are excessive. More than half of all annual sales on Amazon in Italy come from small and medium businesses, and their success is at the heart of the business model, it said in a statement.
National competition authorities have rushed to impose multimillion fines on other online tech giants as Italy moves against Amazon.
The German competition authority opened an investigation against Amazon in May to see if it has to comply with the new rules in the country.
The French competition watchdog has hit the internet giant with two separate fines. Apple was fined 1.1 billion by the French authority.
The UK and the EU are investigating how Facebook uses customer data to advance its position. All of the large US platforms have antitrust probes opened by the Belgian government.
The Italian political debate over the regulation of platforms operations has been charged with tension over the past few years as their market share grew across the country, increasing their profits, and workers demanded more rights and higher salaries.
Italy's labor minister praised the European Commission's draft directive to regulate platforms' employment practices. This is a priority for the Italian government.
A group of workers protested outside of Amazon's largest hub in Italy on Black Friday.
The labor union representative said that the mass consumption model had worsened labor conditions for contractors.
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