PRH signs Amazon sales agreement

PRH signs Amazon sales agreement

Penguin Random House has signed new long-term sales agreements for print and e-book sales with Amazon in both the US and UK, on undisclosed terms.

The agreement was confirmed by Amazon. A PRH spokesperson said: "We do not discuss our relationships with our retail partners. But, as you can see, we still are in business with Amazon, and with all our retail partners, and will continue to be."

In the US, Penguin Random House was the last of the original agency publishers to reach a new agreement after its Department of Justice mandated deals reached conclusion. In the UK, PRH and Amazon were understood to be in tough terms negotiations last month, with fears that the dispute could escalate as did that between the e-tail giant and Hachette Book Group US last year. It is the first time a major publisher has negotiated such a deal with Amazon on what appears to be a global basis, though it is unclear if the deals put in place in the US and UK are the same. Previously Amazon has negotiated separately with US and UK publishers. There is also no detail on the nature of the new terms: publishers such as Hachette US, Simon & Schuster and Macmillan have previously confirmed a return to agency in the US, and Amazon said in May that it would accept any similar deal with Penguin Random House.

The speed of resolution has also surprised some observers, but could have been impacted by the announcement last week of an investigation into Amazon by the European Commission. Speaking to The Bookseller this week, lawyers have warned that if the EC investigation finds that Amazon’s Most Favoured Nation (MFN) clauses in contracts with publishers make it difficult for other e-book distributors to compete and are detrimental to customers, then publishers may have to renegotiate with the e-commerce giant. Under the terms of its agreement with the European Commission dating back to the e-book price fixing investigation in 2011, PRH would not be allowed to enter into an agreement with a “retail price MFN clause” for a further three years—Penguin was the last of the five publishers to settle its case in July 2013.

Alex Hardy, a lawyer for Harbottle & Lewis, said those publishers currently engaged in new contract negotiations with Amazon—thought to include Hachette UK as well as, up to this week, Penguin Random House—may seek to use the investigation as leverage to secure a better deal or delay one. She said: “Publishers should be looking to see what type of MFN clauses they have in their contracts [with Amazon] and whether they can be severed. If the EC rules against these clauses and the MFN clauses can’t be severed from publishers’ contracts, then the whole contract could be void. This could trigger contract renegotiations.”

Hardy added: “Alternatively, publishers already negotiating [with Amazon, or any other party insisting on an MFN clause being included in contracts] could campaign for better terms because of this investigation.”