Short Reads

European Commission accepts Amazon's commitments in e-book probe

European Commission accepts Amazon's commitments in e-book probe

European Commission accepts Amazon's commitments in e-book probe

01.06.2017 NL law

On 4 May 2017, the European Commission announced its decision to make the commitments offered by Amazon legally binding. Under these commitments, Amazon (the largest distributor of e-books in Europe) will no longer enforce or introduce a variety of "most favoured nation" (MFN) clauses in its distribution agreements with e-book publishers in Europe.

MFN clauses – otherwise known as price parity clauses – are designed to ensure that a buyer's counterparty will offer its services under terms that are at least as favourable as those offered by the seller to any other buyer. In recent years, MFN clauses have been the subject of scrutiny in numerous investigations by national competition authorities, most notably in the online hotel booking sector [see our October 2013 and May 2017 Newsletters]. The main concern associated with MFN clauses is that they dampen competition and undermine market entry, ultimately resulting in higher prices for consumers.

In June 2015, the Commission initiated proceedings to examine certain contract terms in Amazon's e-book distribution agreements. The Commission's preliminary assessment at the end of 2016 concluded that Amazon may be dominant in the relevant markets for the retail distribution of English and German language e-books to consumers in the EEA. The assessment expressed concern that Amazon may have abused its potentially dominant position.

The Commission's concerns focus not only on price but also non-price related MFN clauses. The relevant MFN clauses require publishers to inform Amazon about more favourable or alternative terms offered to Amazon's competitors and/or to offer Amazon similar (or better) terms and conditions as those offered to Amazon's competitors. Examples include:

  • Business Model Parity clauses, requiring publishers to notify and offer Amazon alternative business models that have been made available to e-book retailers other than Amazon.
  • Selection Parity clauses, requiring publishers to make available to Amazon a given e-book as a result of that e-book being supplied to any other e-book retailer.
  • Agency Price Parity clauses, requiring publishers to set an agency price on Amazon that is similar or better than the price set on any other e-book retailer.
  • Discount Pool provisions, providing a 'pool' of credits, calculated on the basis of differences between prices set on Amazon and prices set on competing platforms, that Amazon may use at its discretion to discount agency prices for any e-book supplied on its platform.
  • Notification provisions, requiring publishers to notify Amazon if different alternative business models, e-books, features, promotions or lower prices are made available to Amazon's competitors.

According to the Commission, the MFN clauses under scrutiny may be capable of weakening competition at the e-book distribution level, deterring entry or expansion by (potential) competitors of Amazon and/or strengthening Amazon's potentially already-dominant position, leading to less choice, less innovation and higher prices for consumers. Importantly, the Commission held that each of the clauses "represent, in and of themselves, a potential abuse of Amazon's dominant position in the relevant markets in the EEA" (emphasis added).

To meet the Commission's concerns, Amazon offered not to enforce or introduce the parity clauses and notification provisions in e-book distribution agreements and to allow publishers to terminate e-book contracts that contain Discount Pool provisions. These final commitments apply for a period of five years and to any e-book that Amazon distributes in the EEA. If Amazon breaks these commitments, the Commission can impose a fine of up to 10% of the company's worldwide turnover, without having to prove an infringement of the EU antitrust rules.

This article was published in the Competition Law Newsletter of June 2017. Other articles in this newsletter:

  1. Recent enforcement action emphasizes the importance of compliance with procedural EU merger rules
  2. European Commission publishes final report on e-commerce sector inquiry 
  3. European Commission issues new rules for State aid to ports, airports, culture and the outermost regions
  4. District Court of Amsterdam rules on the validity of the assignments and prescription of CDC's claims for damage in sodium chlorate cartel
  5. Belgian Competition Authority fines undertakings for bid-rigging in railway tender

Team

Related news

03.10.2019 NL law
It's in the details: HSBC fine quashed for insufficient reasoning

Short Reads - The General Court annulled the EUR 33.6 million fine imposed on banking group HSBC for its participation in the euro interest rates derivatives cartel. Full annulment was granted based on the Commission's failure to provide sufficiently detailed reasoning for the first step of the fine calculation, establishing the value of sales. As the value of sales could not be established in a straightforward way, the Commission used a proxy. When doing so, the Commission needs to properly explain its reasoning to allow the companies fined to understand how it arrived at the proxy. 

Read more

03.10.2019 NL law
The postman will no longer ring twice: Minister unblocks postal merger

Short Reads - The Dutch Authority for Consumers and Markets (ACM) recently blocked postal operator PostNL's acquisition of its only national competitor, Sandd, because this would create "a monopolist on the postal delivery market". However, the Dutch Minister of Economic Affairs and Climate Policy has overruled the ACM's decision on grounds of public interest. Invoking industrial policy or public interest reasons for merger clearance seems to be catching on.

Read more

03.10.2019 NL law
The ACM has to pay: moral damages awarded to real estate traders

Short Reads - The Dutch Authority for Consumers and Markets (ACM) needs to cough up a total of EUR 120,000 in moral damages to three real estate traders. The Dutch Trade and Industry Appeal Tribunal (CBb) agreed with the real estate traders that the annulment of the ACM's cartel decisions against them was insufficient compensation for the harm they suffered as a result of the length of the procedure and the press coverage of their cases.

Read more

02.10.2019 NL law
Politie aansprakelijk voor schietpartij Alphen aan den Rijn

Short Reads - De politie is aansprakelijk voor de schietpartij in een winkelcentrum Alphen aan den Rijn in 2011. Dat oordeelt de Hoge Raad in zijn arrest van 20 september 2019 (ECLI:NL:HR:2019:1409). Bij deze schietpartij vonden zes mensen de dood en raakten zestien mensen gewond. De dader doodde ook zichzelf. Nabestaanden van dodelijke slachtoffers, slachtoffers die gewond raakten en winkeliers spreken de politie aan tot schadevergoeding. Zij voeren aan dat de politie de vergunning voor de wapens die de man gebruikte, niet had mogen verlenen.

Read more

03.10.2019 NL law
Margrethe Vestager to play matchmaker between enforcement and regulation

Short Reads - Current Competition Commissioner Margrethe Vestager may face even greater challenges in the next European Commission. President-elect Ursula von der Leyen has not only nominated Vestager for a second term as Commissioner for Competition, but has also asked her to coordinate the European Commission's digital agenda. As a result, Vestager may soon be tackling digital issues through competition enforcement whilst also proposing additional regulation to deal with these (and related) issues pre-emptively.

Read more

02.10.2019 NL law
Dutch national police service liable for unlawful granting of firearms permit

Short Reads - In a recent decision (ECLI:NL:HR:2019:1409), the Supreme Court has decided that the Dutch national police force is liable for damage suffered by victims of a shooting which took place in a shopping centre in 2011; an event that shocked the Netherlands. The Supreme Court held that the police had unlawfully granted a permit for the firearms used in the shooting.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring