EU and Amazon cut deal to end antitrust investigation over e-books deals

Amazon logoLast week the European Commission has communicated its decision to formally accept commitments by US tech giant Amazon to end an EU antitrust investigation over contracts with e-book publishers. The Seattle-based company has proposed to drop some clauses in its contracts that required publishers to inform about terms offered to the company’s competitors and to give to Amazon equal or better terms.

The move represents a way for Amazon to avoid potentially hefty fines, but also a way for the Commission to close a complex antitrust case, being this not the first time EU regulators seek compromises with business giants.

Background

The European Commission opened a formal antitrust investigation against Amazon in June 2015. The concern was that, thanks to such “parity clauses”, Amazon may have abused its dominant position on the markets for the retail distribution of English and German language e-books to consumers.

The clauses covered not only price but many aspects that a competitor can use to differentiate itself from Amazon, such as an alternative business (distribution) model, an innovative e-book or a promotion. Article 102 of the Treaty on the Functioning of the European Union (TFEU) and Article 54 of the EEA Agreement prohibit the abuse of a “dominant position which may affect trade and prevent or restrict competition”.

The Commission invited comments from “interested parties”, and on January 24, 2017 Amazon offered to change its contracts to comply with the Commission’s regulations, by stripping the clauses in question. The commitments apply for five years and, under the terms of the agreement announced last Thursday, Amazon will implement changes to e-books distributed in any language in the European Economic Area or EEA (so in all 28 EU member states plus affiliated nations like Iceland, Liechtenstein, and Norway).

The move

“Today’s decision will open the way for publishers and competitors to develop innovative services for e-books, increasing choice and competition to the benefit of European consumers”, said last week Commissioner Margrethe Vestager, in charge of competition policy. “Amazon used certain clauses in its agreements with publishers, which may have made it more difficult for other e-book platforms to innovate and compete effectively with Amazon”, she also declared, as reported in an official statement by the European Commission. “We want to ensure fair competition in Europe’s e-books market worth more than 1 billion euros”, she added.

Amazon too expressed satisfaction to have reached an agreement with the European Commission. In a response sent by Amazon to Engadget, the US e-company said it was “pleased to have reached an agreement with the European Commission”. “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 letter by Amazon said.

Amazon’s offer

More specifically, Amazon has offered – on top of not including in new contracts any clause requiring publishers to keep Amazon informed of terms and condition with competitors and/or to give Amazon same/better conditions – to let publishers terminate existing contracts that link discounts for e-books on Amazon to the retail price of the same books on other platforms. So publishers are now free to terminate agreements, on 120 days’ advance written notice, should those contain the so-called “Discount Pool Provision”.

Under the new agreement the US tech giant will not be fined unless it breaches this deal, in which case it could be hit with penalties that could reach the 10 percent of its total annual turnover. Separately, the Commission is also probing Amazon over tax arrangements with Luxembourg to minimize its tax bill, as part of a wider investigation on such deals in the 28-country bloc.

A “new way”

Amazon is not the only one tech company to have come under the lens of European regulators in the last few years. Microsoft, Facebook, Intel and, more remarkably, Google all have faced – or are facing – accusations of anti-competitive practices in the 28-country bloc. Also, this is not the first case where the EU’s executive arm accepts or at least takes into consideration an offer by the accused party to settle an antitrust case.

Last November, the EU-Gazprom case became prominent after the state-controlled Russian energy group announced it will work on a compromise with EU regulators to finalise a deal to end a five-year antitrust case.

It seems that now seeking an agreement with the accused party is becoming a sort of more favourable option not just for the company itself but also for the Commission. Indeed if it is true that no fine could be imposed on a company after the agreement, it is also true that a settlement represents a way to end very complex antitrust cases that otherwise could drag on for years, with a potential negative impact on future investments.

Article 9 of the EU’s Antitrust Regulation (Regulation 1/2003) allows the Commission to conclude antitrust proceedings by accepting commitments offered by a company. Such a decision does not reach a conclusion on whether EU antitrust rules have been infringed but legally binds the company to respect the commitments.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

European Business Summit 2014: The role of youth entrepreneurship education in EU’s Strategy for Competitiveness

What options the new President of Ukraine has?

From Grexit to Brexit: UK industry now says the in/out referendum is good for your health

Global Citizen – Volunteer Internships

Draghi rehabs ECB into a tool to support growth and employment; a departure from Teutonic orthodoxy

The US bugged Europe: Is this news?

MasterCard at European Business Summit 2015: A focus on innovation will drive inclusive economic growth for Europe

Commission deepens criticism on German economic policies

Why lay people don’t expect anything good from G20

GREXIT final wrap-up: nobody believed Aesop’s boy who cried wolf so many times

A Sting Exclusive: “Doing ourselves a favour”, Vice President Dombrovskis underscores that this time growth has to come from within the EU

EntEx Organises 5 Summer Schools for Young Entrepreneurs across Europe in June/July 2014

“As German Chancellor I want to be able to cope with the merger of the real and digital economy”, Angela Merkel from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

Pharmaceuticals conceal drug side effects with the EU’s Court blessing

No better year for the EU’s weak chain links

Eurozone needs more than some decimals of growth

Trump to run America to the tune of his business affairs

G20 LIVE: “International communities and leaders have great expectations for 2016 G20 summit in Hangzhou China”, Mr Wang Xiaolong, the Chinese Foreign Ministry’s special envoy stresses live from G20 in Antalya Turkey

Ukraine undecided over a strategic partnership with the EU

China-EU Special Report: Chinese Premier Li Keqiang endorses China’s big investment on Juncker’s plan at 10th China-EU Business Summit

EU to negotiate an FTA with Japan

A critical European young voice on Net Neutrality: the distance between Brussels and Washington

TTIP’s 11th round starts in Miami but EU-US businesses see no sunny side

The ECB again takes care of the bankers not the people

Commission’s feeble response to financial benchmarks fraud

Fair completion rules and the law of gravity don’t apply to banks

Towards the Rise of the United States of the Atlantic?

High-technology manufacturing saves the EU industry

Syria: Why did the US-Russia brokered ceasefire collapse? What does the duo care for?

The EU Commission lets money market funds continue the unholy game of banks

EU security and defence industry prepares positions for ‘producers’ and ‘customers’

Greece’s last Eurogroup or the beginning of a new solid European Union?

Financial Transaction Tax: More money for future bank bailouts?

How much more political is the new EU leadership? Does this include personal bend?

COP21 Breaking News_07 December: “Remove Roadblocks to Climate Action”

Eurozone: Inflation plunge to 0.4% in July may trigger cataclysmic developments

“C’est la vie”? French recession and unemployment to linger in Eurozone

China Unlimited Special Report: The trip to China

May a parody constitute a copyright infringement? European Court of Justice to give the answer

WEF Davos 2016 LIVE: “It is the implementation, Stupid!”, German Finance Minister Wolfgang Schaueble points the finger to Greece from Davos

A Sting Exclusive: “Climate Change needs to be demystified”, Anneli Jättenmäki Vice President of European Parliament underscores from Brussels

MWC 2016 LIVE: Getty chief says one in four new images from phones

The EU pretends not knowing what happens in the Western Balkans

Austerity lovers and ‘relaxationists’ fight over the EU budget

Although Greece is struggling to pay salaries and pensions Varoufakis is “optimistic”; the Sting reports live from EBS 2015

Why the merchant ships can pollute the atmosphere with CO2 quite freely

Do the EU policies on agro-food smell?

An EU Summit without purpose

EU seeks foreign support on 5G from Mobile World Congress 2015 as the “digital gold rush” begins

On Human Rights Day European Youth Forum calls for end to discrimination of young people

Greece may offer to China a European gateway

Court of Auditors: EU spending infested with errors well above the materiality threshold of 2%

Migration has set EU’s political clock ticking; the stagnating economy cannot help it and Turkey doesn’t cooperate

Brussels wins game and match in Ukraine no matter the electoral results

Summer JADE Meeting 2015: We came curious, we left inspired

The Parliament sets the way for the European Banking Union

ECB is about to lend trillions to banks

A Sting Exclusive: why the environment is important to your health, by UNEP’s Head for Europe

German stock market is not affected by the Greek debt revolution while Athens is running out of time

“If they think they can slave an entire nation, then they will just have the opposite results!”, Alexis Tsipras cries out from the Greek parliament

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s