The European Commission (EC) has formally closed its long-running tax investigations against Amazon (AMZN), Starbucks (SBUX), and Stellantis (STLA)-owned Fiat. This marked the end of the regulator’s efforts to challenge the tax practices of major international companies. This decision follows a series of EU court rulings between 2019 and 2023, which stated that the EC had wrongly accused the Netherlands and Luxembourg of granting unfair tax benefits to these companies.
Specifically, in 2015, the EC alleged that Luxembourg and the Netherlands had granted unfair tax benefits to Fiat and Starbucks, respectively, amounting to €20–€30 million each, through rulings that artificially reduced their tax liabilities. However, the European Court of Justice later reversed these findings, citing flaws in the investigations.
Similarly, in 2017, the EC accused Luxembourg of providing €250 million in selective tax advantages to Amazon. However, both the General Court and the Court of Justice canceled this decision, citing insufficient evidence.
AMZN’s Legal Troubles Continue
While the closure of this investigation comes as a relief to Amazon, the e-commerce giant continues to face more legal troubles. Recently, the International Brotherhood of Teamsters filed an unfair labor practice lawsuit against AMZN. Also, a complaint was filed with the Equal Employment Opportunity Commission (EEOC) claiming Amazon’s involvement in union-busting activities. These activities reflect an employer’s attempts to break a trade union to secure a non-union workforce.
Furthermore, AMZN is facing a major lawsuit in which the U.S. Federal Trade Commission (FTC) and 17 state attorneys general have alleged that the company used its market power to inflate prices, overcharge sellers, and stifle competition.
Investors should note that legal proceedings can be expensive and can attract more regulatory scrutiny, leading to stricter regulations and oversight. This could hurt AMZN’s performance to some extent. According to the TipRanks’ Risk Analysis tool, Amazon’s legal and regulatory risks account for 25% of its total risks, which is much above the industry’s average of 18%.
Is AMZN a Good Stock to Buy?
Turning to Wall Street, analysts remain bullish about the company’s prospects despite legal headwinds. Overall, AMZN stock has a Strong Buy consensus rating based on 45 Buys and one Hold assigned in the last three months. At $239, the average Amazon price target implies a 16.17% upside potential. Year-to-date, shares of the company have gained 35.41%.
