The European Commission (EC) has confirmed that Amazon has offered to remove controversial Most Favoured Nation (MFN) clauses in e-book contracts and is asking publishers for feedback on the pledges.
The EC has given publishers in Europe one month to respond to the e-commerce giant’s offer not to enforce any clause requiring them to give Amazon similar terms and conditions as those given to its competitors, known as MFN clauses.
The MFN clauses also forced publishers to offer Amazon any new alternative business models, such as using different distribution methods or release dates, or making available a particular catalogue of e-books.
Along with eradicating MFN clauses, Amazon also has to allow publishers to terminate e-book contracts which contain a clause linking discount possibilities for e-books to the retail price of a given e-book on a competing platform (so-called Discount Pool Provision).
The retailer has committed not to include these clauses in any new e-book agreement with publishers for a period of five years.
It will also appoint a trustee to monitor that it is complying with its pledges, Amazon said.
Amazon has been pressured into the move following an EC investigation beginning in July 2015 which probed whether MFN contracts constituted the abuse of a dominant market position which may restrict competition, and it is likely to have wanted to avoid a hefty fine. It was reported last year that Amazon was seeking to settle the case.
An Amazon spokesperson said today the company was pleased to have reached an agreement with the European Commission, but it disagreed with the suggestion in the EC's preliminary assessment that there was a separate market for print and e-books and said that the notion less choice was given to readers by its strong e-book market was "simply wrong".
"In our view, there is no separate market for the sale of e-books as they compete directly with print books and many other forms of media," the Amazon spokesperson said. "We welcome the fierce competition that exists across these forms of media and the many benefits this competition offers customers. The provisions in question helped to deliver great selection and lower prices to customers — the notion that they had the opposite effect is simply wrong. We will continue to cooperate with the Commission during this process, and we will continue working to help authors and publishers reach more readers, improve the digital reading experience, and bring our customers the best possible prices and selection."
The retailer also disbanded an exclusive agreement with Apple to sell and supply audiobooks last week after EC pressure.
However, today’s offers from Amazon only apply to publishers within the European Economic Area and this morning the chief executive of the Publishers Association (PA), Stephen Lotinga, called on UK authorities to confront Amazon's book market dominance which he said can no longer be left to the European Commission to tackle in the wake of Brexit.
Speaking at the Westminster Media Forum on 'Book Publishing and the Wider Creative Market' in London this morning (24th January), Lotinga said: "In the case of e-books we now have a situation in the UK where one company reportedly has up to 90% of market share. I refer of course to Amazon," said Lotinga. "When a business reaches such scale, if left unchecked, it is almost inevitable that they will use their dominance in such a way to ensure the status quo does not change and thereby prevent real competition in the market place.”
Reuters first reported the news this morning citing “a person familiar with the matter”, but the report is consistent with what The Bookseller has been told.
The Bookseller reported in June 2014 that Amazon was pressing for new terms with contracts that included MFN clauses over pricing and deals, though MFN requirements have been in some publisher contracts for longer. The terms are widely believed to have been a significant factor in preventing competition emerging in the moribund e-book market that Amazon currently dominates.