Strategy

EU Opens Antitrust Probe of Amazon

The European Commission is looking into whether Amazon has abused its dominant position in the European e-book market.
Matthew HellerJune 15, 2015

The European Commission has begun an investigation into whether clauses in Amazon’s contracts with European book publishers are anticompetitive.

The clauses require publishers to inform Amazon — the largest distributor of e-books in Europe — when they offer more favorable or alternative terms to its competitors. EU antitrust rules prohibit abuses of a dominant market position and restrictive business practices.

“It is my duty to make sure that Amazon’s arrangements with publishers are not harmful to consumers, by preventing other e-book distributors from innovating and competing effectively with Amazon,” Margrethe Vestager, EU Commissioner in charge of competition policy, said in a news release. “Our investigation will show if such concerns are justified.”

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Initially, investigators will focus on England and Germany, the largest markets for e-books in the eurozone. Amazon has been estimated to sell about 8 out of every 10 e-books in Britain.

It was Amazon, ironically, that pressured the U.S. Department Justice to file an antitrust suit against Apple and five leading publishers for conspiring to fix e-book prices. A federal judge in 2013 found that Apple violated U.S. antitrust law, a verdict the company is appealing.

The announcement of the EU probe “casts Amazon in a very different role,” The New York Times said, since, in the Apple case, it “was celebrated, and aggressively celebrated itself, as a hero for championing lower prices.”

Last June, the German Publishers and Booksellers Association submitted a complaint to the German antitrust authority, claiming that Amazon’s monopoly-like position in the e-book market violated competition law.

The European Commission said it was concerned that the clauses in Amazon’s contracts “may make it more difficult for other e-book distributors to compete with Amazon by developing new and innovative products and services.” If it brings formal charges, or a statement of objections, against Amazon and Amazon fails to successfully rebut those findings, the company could face a fine of as much as 10% of its most recent annual global sales.

In a statement, Amazon said it was “confident that our agreements with publishers are legal and in the best interests of readers.”