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European commission to investigate Amazon's ebook dominance European commission to investigate Amazon's ebook dominance
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The European commission has launched a competition inquiry into Amazon’s dominant market position in ebooks, as Brussels steps up its scrutiny of US tech groups. The European commission has launched a competition inquiry into Amazon’s dominant market position in ebooks, as Brussels steps up its scrutiny of US tech groups. The EU’s executive branch is looking at clauses in contracts between Amazon and publishing houses that restrict publishers from offering better terms to the online retailer’s competitors. The clauses sometimes require publishers to disclose to Amazon the terms offered to rival retailers.
“Amazon has developed a successful business that offers consumers a comprehensive service, including for ebooks,” said the EC’s competition commissioner, Margrethe Vestager. “Our investigation does not call that into question. However, it is my duty to make sure that Amazon’s arrangements with publishers are not harmful to consumers, by preventing other ebook distributors from innovating and competing effectively with Amazon. Our investigation will show if such concerns are justified.”
The EU’s executive branch is looking at clauses in contracts between Amazon and publishing houses that restrict publishers from offering better terms to the online retailer’s competitors. The clauses sometimes require publishers to disclose to Amazon the terms offered to rival retailers.
“Amazon has developed a successful business that offers consumers a comprehensive service, including for ebooks,” said the EC’s competition commissioner Margrethe Vestager.
“Our investigation does not call that into question. However, it is my duty to make sure that Amazon’s arrangements with publishers are not harmful to consumers, by preventing other ebook distributors from innovating and competing effectively with Amazon. Our investigation will show if such concerns are justified.”
The inquiry will focus on English and German ebooks, which are the largest markets across Europe. Amazon also produces the popular Kindle e-reader.The inquiry will focus on English and German ebooks, which are the largest markets across Europe. Amazon also produces the popular Kindle e-reader.
The move comes two months after the commission opened a formal investigation into Google and its dominance of internet search. Vestager’s team is also examining the tax affairs of Amazon in Luxembourg and Apple in Ireland. President Barack Obama, whose administration is trying to negotiate an ambitious transatlantic free trade deal with the EU, warned earlier this year against European protectionism hurting the US tech sector. Two months ago, the commission opened a formal investigation into Google and its dominance of internet search. Vestager’s team is also examining the tax affairs of Amazon in Luxembourg and Apple in Ireland. President Barack Obama, whose administration is trying to negotiate an ambitious transatlantic free trade deal with the EU, warned earlier this year against European protectionism hurting the US tech sector.
Amazon said on Thursday it was confident its agreements with publishers were legal and in the best interests of readers. “We look forward to demonstrating this to the Commission as we cooperate fully during this process,” it said. Amazon said on Thursday it was confident that its agreements with publishers were legal and in the best interests of readers. “We look forward to demonstrating this to the commission as we cooperate fully during this process,” it said.
Vestager, who took over the competition brief from Spaniard Joaquín Almunia last year, has made a quick start. The 47-year-old told the Guardian in December that she has not been pressured by Washington. “I haven’t heard from the US in any way,” she said. Vestager, who took over the competition brief from Spaniard Joaquín Almunia last year, has made a quick start in her new role. The 47-year-old told the Guardian in December that she has not been pressured by Washington. “I haven’t heard from the US in any way,” she said.
The relationship between book publishing and the tech sector has drawn in Brussels before. The Amazon inquiry comes two years after the commission took issue with Apple and its deals with five publishers – Penguin Random House, Hachette Livres, Simon & Schuster, HarperCollins and Georg von Holtzbrinck Verlagsgruppe. The tech giant and publishers were forced into a series of concessions. The relationship between book publishing and the tech sector has drawn the attention of Brussels before. The Amazon inquiry comes two years after the commission took issue with Apple and its deals with five publishers: Penguin Random House, Hachette Livres, Simon & Schuster, HarperCollins and Georg von Holtzbrinck Verlagsgruppe. The tech giant and publishers were forced into a series of concessions.
Apple and the publishers have also been on the back foot in the US courts where they have been found liable for conspiring to breaching competition laws. Despite a long losing run in the American courts, last December, one US appeals court judge at least noted how unusual it was for him to be considering the enforcement of anti-trust laws against Apple and the publishers in a way that blocked their efforts to challenge Amazon’s near-monopoly. Apple and book publishers have also been on the back foot in the US courts, where they have been found liable for conspiring to breaching competition laws. Despite a long losing run in the American courts, last December, one US appeals court judge at least noted how unusual it was for him to be considering the enforcement of antitrust laws against Apple and the publishers in a way that blocked their efforts to challenge Amazon’s near-monopoly.
“Would it not matter that all these people [Apple and the publishers] got together in order to defeat a monopolist [Amazon]?” he asked the court. “It is like ... the mice that decide that they want to put a bell on the cat.”“Would it not matter that all these people [Apple and the publishers] got together in order to defeat a monopolist [Amazon]?” he asked the court. “It is like ... the mice that decide that they want to put a bell on the cat.”
Amazon also faces pressure from Brussels over tax. Last month it became the first high-profile internet firm to reconfigure its European tax structures to ensure sales from major markets such as the UK, Germany, France and Spain are no longer diverted through Luxembourg. Amazon said it was “now recording retail sales made to customers in the UK through the UK branch. Previously, these sales were recorded in Luxembourg.” Amazon also faces pressure from Brussels over tax. Last month it became the first high-profile internet firm to reconfigure its European tax structures to ensure that sales from major markets such as the UK, Germany, France and Spain are no longer diverted through Luxembourg. Amazon said it was “now recording retail sales made to customers in the UK through the UK branch. Previously, these sales were recorded in Luxembourg.”
The moves, however, while widely welcomed by tax campaigners, do not address the alleged sweetheart deal Amazon secured in Luxembourg which remains the focus of the commission’s inquiry. Vestager is examining whether Luxembourg’s tax deal is so favourable that it constitutes illegal state aid. The moves, however, while welcomed by tax campaigners, do not address the alleged “sweetheart” deal Amazon secured in Luxembourg, which remains the focus of the commission’s inquiry. Vestager is examining whether Luxembourg’s tax deal is so favourable that it constitutes illegal state aid.
The commission intervened in the ebooks market in 2012 to ensure that the VAT levels charged on online transactions – all diverted through Luxembourg – were not distorting competition. European member states are allowed to exempt VAT on physical book sales, but not on ebooks. Luxembourg had offered a low VAT rate of 3%, but this was viewed as in breach of European rules. The commission intervened in the ebook market in 2012 to ensure that the VAT levels charged on online transactions – all diverted through Luxembourg – were not distorting competition. European member states are allowed to exempt VAT on physical book sales, but not on ebooks. Luxembourg had offered a low VAT rate of 3%, but this was viewed as in breach of European rules.