Also means
to disadvantage
Usage Note
Penalizzare takes avere as its auxiliary and is widely used in both legal contexts (la legge penalizza le piccole imprese) and sports (l'arbitro ha penalizzato la squadra). It is not a false friend with English 'penalize' — the meanings align closely. The related noun is la penalizzazione.
Examples
"Questa regola penalizza i lavoratori giovani."
Natural Translation
This rule penalizes young workers.

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