BA leads way in Amazon competition inquiry

BA leads way in Amazon competition inquiry

The UK Booksellers Association has taken a lead role in pressing for a regulatory investigation into Amazon, The Bookseller can reveal. The association submitted a dossier to the Competition and Markets Authority last November about Amazon’s “domination” of the UK market, which it believes paved the way for the European Commission to begin its formal anti-trust investigation of the retailer. The BA described it as the “biggest lobbying job” it had undertaken, and expressed delight at the outcome.

The Commission revealed earlier today (11th June) that it had launched a probe into the way Amazon distributes e-books and its relationship with publishers, particularly focusing on contract clauses that "require publishers to inform Amazon about more favourable or alternative terms offered to Amazon's competitors” otherwise known as ‘Most Favoured Nation’ (MFN) clauses.

Tim Godfray, c.e.o of the Booksellers Association, said: “We are thrilled and delighted that the European Commission’s Competition Authority has decided to launch today a formal investigation not just into the European e-book sector, but specifically into Amazon’s e-book distribution arrangements and certain business practices. DG Competition have very considerably resources at their disposal – far bigger than any national competition authority -  and are able to mount an extremely thorough investigation.  In the past, DG Comp have investigated companies like Microsoft and Google.”

He went on to reveal that in the early part of 2014, the BA and its lawyers started to put together a major submission expressing concern over the way in which Amazon was believed to be dominating the book market. Since the submission was lodged in November 2014, the BA and its lawyers have been giving additional oral and written evidence to the UK’s CMA.

“This is the biggest lobbying job the BA has ever been engaged in”, said Sydney Davies, head of trade and industry at the BA. “We believe our evidence, which DG Competition in Brussels has seen – has played a substantial part in influencing DG Comp’s decision to mount this formal antitrust investigation. We are pleased to note that the focus will be particularly on e-books in English and German”.

Godfay added: “Monopolies are never good for consumers in the long run.  Amazon has unparalleled market power and has become a behemoth . . . It has been very difficult for booksellers to compete against Amazon . . . In the interests of consumers, we want to see fair competition, an end to any unfair restrictive practices, and a diverse marketplace.  We strongly believe that competition investigations like this are in the public interest.”

The Bookseller first reported publisher concerns over new contract terms that included MFN clauses a year ago, at the same time as it reported that the EC had opened a preliminary investigation into the market. The MFN clauses typically demand that a publisher offers Amazon the cheapest price for an e-book and inform it if another retailer is offering the book cheaper. The Bookseller understands that certain clauses also include “promotions parity”, meaning publishers have to give Amazon the same promotional offers they provide to any other digital book distribution channel, on terms as favourable and “business model parity”, so if publishers join, for example as subscription platform, they must offer Amazon the same opportunity.

That clause reads: "If you launch any alternative business model with another digital book distribution channel you will notify us and offer us the opportunity to make your eBooks available under the same business model on the same material terms."

The MFN clauses even apply to publisher’s own websites, The Bookseller understands.

The EC said its investigation was “focused on clauses which seem to shield Amazon from competition from other e-book distributors” and said it would “now investigate further whether such clauses may hinder the level playing field and potentially decrease competition between different e-book distributors to the detriment of consumers”. The EC said it would be investigating Amazon’s e-book distribution, in English and German only initially. The key question will be whether the EC finds such clauses cause harm to consumers.

There is no deadline to complete inquiries, and the EC stated that the opening of proceedings did not prejudge in any way the outcome of the investigation. In response to the investigation, Amazon has said: “Amazon is confident that our agreements with publishers are legal and in the best interests of readers.  We look forward to demonstrating this to the Commission as we cooperate fully during this process.”

Alexander Skipis, managing director of German trade association Börsenverein des Deutschen Buchhandels, also said his organisation had been instrumental in alerting the Commission. "We welcome the decision by the EU Commission to look into Amazon’s business practices that are akin to blackmail, and thereby safeguarding the market control we called for," he said. "It was the complaint that we lodged in June 2014 that attracted the attention of the EU Commission in regard to these questionable practices and which led to a preliminary investigation. Börsenverein will continue to carefully monitor cases of market abuse. At present for example we are looking into the business conduct of Audible, which is fully owned by Amazon".

However a spokesperson for the Commission claimed that the investigation had been launched at the initiative of the Commission itself, saying that it was distinct from a recent complaint about Amazon from Börsenverein.