By Foo Yun Chee

BRUSSELS, March 13 (Reuters) - Amazon AMZN.O on Friday won its appeal against a record 746-million-euro ($854.4 million) fine imposed by Luxembourg’s privacy regulator, after a court found the watchdog had not properly carried out its analysis and must reassess the case.

The Luxembourg National Commission for Data Protection (CNPD) penalised Amazon in 2021 over its online behavioural advertising practices, saying its processing of users' personal data breached EU privacy rules known as the General Data Protection Regulation (GDPR).

The same court had last year sided with the privacy watchdog by upholding the fine, prompting Amazon to appeal its ruling.

Judges said they accepted the U.S. tech giant's argument that the watchdog had failed to analyse whether the company had intentionally violated the GDPR or was merely negligent.

They said CNPD also did not examine other sanction options and had almost automatically handed out the fine.

"The relevant analysis by the supervisory authority will have to be carried out for the first time upon referral," the court said, annulling the regulator's 2021 decision.

Amazon welcomed the court judgment.

"We strongly disagreed with the initial ruling and disproportionate fine that had originally been issued in this case, which is why we appealed," a spokesperson for the company said in an email.

The CNPD said it took note of the ruling.

It said its action "has led to Amazon's practices being brought into full compliance with the relevant provisions of the case regarding online behavioural advertising".

($1 = 0.8731 euros)

(Reporting by Foo Yun Chee, Editing by Louise Heavens)

((foo.yunchee@thomsonreuters.com; +32 2 585 2866; Reuters Messaging: foo.yunchee.thomsonreuters.com@reuters.net))