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

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

The world is a book and those who do not travel read only one page

The European Parliament floating over the South China Sea

‘Once-in-a-generation opportunity’ will be squandered, warns Guterres, unless social, economic, environmental challenges are met

Tropical Cyclone Idai affects 1.5 million across Mozambique and Malawi, as UN ramps up response

Climate change recognized as ‘threat multiplier’, UN Security Council debates its impact on peace

From Shadows to Sunlight, Paraguay’s Road to Transparency

Theresa May expresses her optimism about Britain’s economic success while UK business outlook seems ominous

FROM THE FIELD: Weather reports come to aid of Uganda’s farmers

Why capital markets have no more reservetions about Eurozone

Environmentalists have removed nearly 40 tonnes of trash from the Pacific

‘Deteriorating’ human rights in Belarus amounts to ‘wholescale oppression’: UN expert

Azerbaijan chooses Greek corridor for its natural gas flow to EU

The UK’s River Thames has come back to life – with a seal population to prove it

How businesses can create an ethical culture in the age of tech

Security: better access to data for border control and migration management

10 months were not enough for the EU to save the environment but 2 days are

EU leaders let tax-evaders untouched

My Mothers

European Youth Vlog

China dazzles the world with her Silk Road plan to connect, Asia, Europe and Africa

A Sting Exclusive live from Brussels: Solheim’s consequential visit leading the world and the UN

Draghi indirectly accuses Germany of using double standards in financial issues

Britain’s poet laureate has created a prize to highlight poetry about the climate crisis

This Danish scheme is offering free kayak rides… for picking up trash

CHALLENGING THE ZEITGEIST OF DIGITAL – Change making projects innovate mobile support for refugees, inclusive environments, early breast cancer detection and more

“The Arctic climate matters: to what degree?”, a Sting Exclusive co-authored by UN Environment’s Jan Dusik and Slava Fetisov

Italy’s rescue operation Mare Nostrum shuts down with no real replacement. EU’s Triton instead might put lives at risk

Environmental labelling, information and management schemes are central to the circular economy

Here’s how we can use agriculture to fight climate change

Parliament cuts own spending to facilitate agreement on EU budget

The fat from your next takeaway meal could help clean up global shipping

This AI is working with a fleet of drones to help us fight ocean plastic

United States: UN human rights office welcomes California moratorium on death penalty

Tuesday’s Daily Brief: Libya civil war, African displacement, global trade tensions, terrorists’ children ‘secretly detained’, and more

Anti-vaccers: does the empty can rattle the most?

Mental health and suicide prevention – What can be done to increase access to mental health services in my region?

UN ‘prioritizing needs’, ramping up aid, as Hurricane Dorian continues to batter the Bahamas

UN civil society conference to focus on sustainable solutions for challenges of urban life

German opposition win in Lower Saxony felt all over Europe

Why poorer people suffer more from climate change

Gender inequality in the medicine field: two commonly issues

EU and China to do more in common if the global scene gets worse

World Digital Media Awards winners announced at WNMC.19 in Glasgow, in association with The European Sting

November infringements package: key decisions

EU Emissions Trading System does not hurt firms’ profitability

Malaria: Focus on pregnant women and children, stresses UN health agency report

Wednesday’s Daily brief: Day 3 of anti-hatred summit, UNFPA turns 50, Ben Stiller #WithRefugees, updates on Abyei

These are the 3 key skill sets workers will need to learn by 2030

FROM THE FIELD: Crisis in Kassala FROM THE FIELD: Crisis in Kassala

Greece leaves EU aid program, gets last 15 billion euro

EU Border and Coast Guard: new corps of 10 000 border and coast guards by 2027

UN condemns deadly attack on Burkina Faso church

Low productivity jobs continue to drive employment growth

These countries create most of the world’s CO2 emissions

This is how countries compare on gun deaths

A Sting Exclusive: “Paris is indeed our best bet for a secure climate future”, EU Commissioner for Environment Karmenu Vella cries out from Brussels

As human genome editing moves from the lab to the clinic, the ethical debate is no longer hypothetical

How digital can transform healthcare in Asia for millions of people

How Big Food is responding to the alternative protein boom

Victim-centred laws ‘paramount’ to combat online sexual abuse against children

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 )

Google photo

You are commenting using your Google 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 )

Connecting to %s