e-book – Image by Maximilian Schoenherr
(BRUSSELS) – The EU Commission is inviting comments on a number of changes Amazon is making to its e-books contracts, in response to a formal antitrust investigation into Amazon’s practices started in 2015.
The changes are being offered to address competition concerns relating to parity clauses in contracts with publishers. These clauses may breach EU antitrust rules, says the EU executive, and thus result in reduced competition among e-book distributors and less consumer choice.
The parity clauses contained in contracts between Amazon and publishers, sometimes referred to as “most-favoured-nation” or “MFN” clauses, require publishers to inform Amazon about more favourable or alternative terms offered to Amazon’s competitors and/or offer Amazon similar terms and conditions than to its competitors.
This requirement includes forcing publishers to also offer to Amazon any new alternative business models, such as using different distribution methods or release dates, or making available a particular catalogue of e-books.
The Commission’s concerns centre on the fact that these clauses may make it harder for other e-book retailers to compete with Amazon by developing new and innovative products and services. Such clauses could also limit competition between different e-book distributors and reduce choice for consumers.
If so, Amazon’s behaviour may violate EU antitrust rules that prohibit abuses of a dominant market position and restrictive business practices, says the Commission.
To address the Commission’s competition concerns, Amazon has offered the following commitments:
- Not to enforce (i) any clause requiring publishers to offer Amazon similar terms and conditions as those offered to Amazon’s competitors or (ii) any clause requiring publishers to inform Amazon about such terms and conditions. This commitment would cover in particular terms and conditions concerning business models, release date and catalogue of e-books, features of e-books, promotions, agency price, agency commission and wholesale price. Amazon would also notify publishers that it would no longer enforce such provisions.
- To allow publishers to terminate e-book contracts that 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). Publishers would be allowed to terminate the contracts upon 120 days’ advance written notice.
- Not to include, in any new e-book agreement with publishers, any of the clauses mentioned above, including Discount Pool Provisions.
The commitments would apply for a period of five years to e-book agreements throughout the European Economic Area. Amazon would appoint a Trustee to monitor Amazon’s compliance with the commitments.
A summary of the proposed commitments will be published in the EU’s Official Journal. Interested parties can submit comments within one month from the date of publication. The full text of the commitments will be available on the case website.
Before it accepts commitments, the Commission gives market players and other interested parties an opportunity to submit comments. If the market test indicates that the commitments are suitable to remedy the concerns, the Commission may adopt a decision under Article 9 of the Antitrust Regulation. Such a decision would not conclude that there is an infringement of EU antitrust rules but would legally bind Amazon to respect the commitments it has offered.
If a company breaks such commitments, the Commission can impose a fine of up to 10% of the company’s worldwide turnover, without having to find an infringement of the EU antitrust rules.
More information, including the full version of the commitments is available on the Commission’s competition website, in the public case register under the case number 40153.
