This morning, the country’s Antitrust Authority slapped Apple with a $1.2 million fine, penalizing its Apple Sales International, Apple Italia S.R.L. and Apple Retail Italia divisions for what it describes as “unfair commercial practices.”

“Sanctions of a total of 900,000 euros have been imposed on the Apple group after it was found responsible for bad commercial practices that harmed consumers,” the agency said in a statement.

According to the Antitrust Authority, Apple has been selling its Italian customers AppleCare extended warranties, despite the fact that they overlap with the standard two-year product warranty required by European law. In other words, it has been upselling customers additional warranty protection without properly explaining the two years of free assistance they are already entitled to under Italian law. Essentially, Apple has been recognizing only the conventional one-year guarantee it offers on most of its products, and the additional coverage provided with the purchase of AppleCare.

Now, in addition to paying the fine levied against it, Apple must, within 90 days, add to its AppleCare plan details of the two-year guarantee required by European law.

Apple has not yet responded to a request for comment.

“We now know that the iPhone 4 antenna attenuation issue is even smaller than we originally thought,” Apple (AAPL) said in an update to its iPhone 4 Case Program site. “A small percentage of iPhone 4 users need a case, and we want to continue providing them a Bumper case for free. For everyone else, we are discontinuing the free case program on all iPhone 4s sold after September 30, 2010. We are also returning to our normal returns policy for all iPhone 4s sold after September 30. Users experiencing antenna issues should call AppleCare to request a free Bumper case.”

PREVIOUSLY

• iPhone 4 Full Coverage on AllThingsD.com
• Apple Hopes for Best Case Scenario in iPhone Flap
• Apple’s “Just Encase” Answer to iPhone 4 Complaints [Live Blog]
• What Will Apple Say Tomorrow? Your Guess Is as Good as My Analyst’s.
• Apple Releases iOS 4.0.1 for iPhone, iOS 3.2.1 for iPad
• The Reality Distortion Field Appears to Be Suffering Attenuation Issues as Well
• Analyst: “Highly Unlikely” iPhone 4 Recall Could Cost Apple $1.5 Billion
• Apple Snips Needling Threads From iPhone 4 Forums
• IPhone 4 Recall? Get a Grip!
• Consumer Reports: By the Way, the iPhone 4 is Also the Best Smartphone on the Market
• Duct-Tape Makers Look for Boost From Consumer Reports iPhone Verdict
• Consumer Reports: We Can’t Recommend the iPhone 4
• Apple: Your iPhone 4 Antenna Is Fine, and So Is Your Reception–But We’re Fixing Our Software Anyway
• Grip Different: Apple, AT&T Sued Over iPhone 4 Antenna Issue
• Gripping Antenna Drama Won’t Hold iPhone 4 Back, Says Analyst
• Apple on iPhone 4 Reception Problems: Grip Different

After being plugged in for somewhere between 5 to 10 minutes I heard a sizzling sound. I looked down on the iPod just in time to see it explode open and start shooting sparks and spewing smoke. I managed to unhook the iPod from my computer’s USB port immediately. I noticed that a small fire had started on the table I had the laptop and the iPod sitting on, and I managed to extinguish those flames quickly before any apparent damage could be done to my laptop. Unlike in other cases, I’ve read about, my iPod continued to spew smoke and spit sparks while throwing out some kind of sooty substance from the inside of the iPod for several minutes after removing the cable from the computer.”

– A Consumerist reader recounts his experiences with Apple’s iPod Flamo

What an ugly week for Apple. Voice and data reception issues plaguing iPhone 3G, MobileMe still not up to company standards and now reports of sparking iPod Nanos. Japan’s Ministry of Economy, Trade and Industry (METI) is investigating a possible battery defect in Apple’s older iPod Nano music players after receiving reports of minor fires caused by overheating devices. “There have been multiple cases of overheating and fire damage, in particular during recharging, so please use caution,” METI said in a statement on its Web site.

METI is working with Apple Japan to diagnose the problem, which is said to affect only Nanos sold in Japan between Sept. 2005 and Sept. 2006, although there have been reports of similar incidents in the states.

Another tough break for Apple (AAPL), which just can’t seem to shake this negative news cycle.

UPDATE: Apple just issued the following statement:

Apple today responded to statements reported by Japan’s METI regarding batteries in the first-generation iPod nanos. Apple has determined that in very rare cases, batteries in first-generation iPod nanos sold between Sept. 2005 and Dec. 2006 can overheat, causing failure and deformation of the iPod nano. Apple has received very few reports of such incidents (less than 0.001 percent of first-generation iPod nano units), which have been traced back to a single battery supplier. There have been no reports of serious injuries or property damage, and no reports of incidents for any other iPod nano model.

Any first-generation iPod nano customers who have experienced their battery overheating should contact AppleCare for a replacement. Any other customers who have concerns about their first-generation iPod nano battery should also contact AppleCare.