EC opens investigation into Amazon's e-books distribution

EC opens investigation into Amazon's e-books distribution

The European Commission has opened a formal antitrust investigation into the way Amazon distributes e-books and its relationship with publishers.

The EC is in particular investigating contract clauses that "require publishers to inform Amazon about more favourable or alternative terms offered to Amazon's competitors and/or offer Amazon similar terms and conditions to its competitors, or through other means ensure that Amazon is offered terms at least as good as those for its competitors". The Commission has concerns that such clauses may make it more difficult for other e-book distributors to compete with Amazon by developing new and innovative products and services.

The Commission will investigate whether such clauses may limit competition between different e-book distributors and may reduce choice for consumers. The EC said that if confirmed, such behaviour could violate EU antitrust rules that prohibit abuses of a dominant market position and restrictive business practices.

The EU Commissioner in charge of competition policy, Margrethe Vestager, said: "Amazon has developed a successful business that offers consumers a comprehensive service, including for e-books. Our investigation does not call that into question. However, it is my duty to make sure that Amazon's arrangements with publishers are not harmful to consumers, by preventing other e-book distributors from innovating and competing effectively with Amazon. Our investigation will show if such concerns are justified."

In response, Amazon 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.”

Initially, the Commission's investigation will focus on English and German e-books and Amazon’s Most Favoured Nation clauses which the commission said “seem to shield Amazon from competition from other e-book distributors” by granting it the right to be informed of more favourable or alternative terms offered to its competitors and/or the right to terms and conditions at least as good as those offered to its competitors.

The Commission said it will 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.” There is no legal deadline to complete inquiries into anti-competitive conduct and  the length of an investigation depends on "a number of factors", the EC said.

The Bookseller reported in July 2014 that the European Union's Directorate General for Competition had approached major UK publishers over an investigation into Most Favoured Nation (MFN) clauses.

In June last year, German trade association Börsenverein officially lodged a complaint against Amazon’s practices with the German competition authorities, which attracted the attention of the EU Commission last July. 

This is not the first time the European Commission has begun investigating the e-books sector under EU antitrust rules. In December 2011 the Commission opened proceedings in the sector because it had concerns that Apple and five international publishing houses—Penguin Random House, Hachette Livres, Simon & Schuster, HarperCollins and Georg von Holtzbrinck Verlagsgruppe - may have colluded to limit retail price competition for e-books , in breach of EU antitrust rules which led to the publishers offering a number of commitments which addressed the Commission's concerns in December 2013 and July 2013. It has also previously investigate MFN clauses in other sectors.