European Commission Opens Opens Formal Investigation Into Amazon’s E-Book Distribution Arrangements

From the European Commission Investigation Announcement

The European Commission has opened a formal antitrust investigation into certain business practices by Amazon in the distribution of electronic books (“e-books”). The Commission will in particular investigate certain clauses included in Amazon’s contracts with publishers. These clauses require publishers to inform Amazon about more favourable or alternative terms offered to Amazon’s competitors and/or offer Amazon similarterms and conditions than to its competitors, or through other means ensure that Amazon is offered terms at least as good as those for its competitors.
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E-books have experienced a surge in popularity in recent years and are of increasing importance to online retail. Amazon is currently the largest distributor of e-books in Europe. Initially, the Commission’s investigation will focus on the largest markets for e-books in the European Economic Area, namely e-books in English and German.
The Commission has concerns that certain clauses included in Amazon’s contracts with publishers concerning such e-books could constitute a breach of EU antitrust rules that prohibit the abuse of a dominant market position and restrictive business practices. In particular, the investigation is focused on clauses which seem to shield Amazon from competition from other e-book distributors, such as clauses 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 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.
Background
This is not the first time the European Commission is 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 the EEA, in breach of EU antitrust rules. In December 2012 and July 2013, respectively, the companies offered a number of commitments, which addressed the Commission’s concerns.
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There is no legal deadline to complete inquiries into anti-competitive conduct. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertaking concerned cooperates with the Commission and the exercise of the rights of defence.

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