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Amazon to amend e-book contracts in bid to defuse EU antitrust probe

Tue 24 Jan 2017

Amazon Kindle

U.S. e-commerce giant Amazon has offered to modify its e-book contracts with publishers in order to settle an EU antitrust probe and avoid potential penalties.

According to the European Commission, the online retailer agreed to scrap a number of e-book clauses so that publishers will no longer be forced to give terms as good as those for rivals.

These clauses include statements around business models, release dates, catalogues of e-books, features, promotions, agency prices, agency commissions and wholesale prices.

As the largest e-book distributor in Europe, the EC opened an investigation into the company’s e-books in both English and German in June 2015. The Commission was concerned that the clauses make it harder for other e-book retailers to compete against Amazon.

The EU’s competition enforcer has given e-book retailer rivals and customers a month to offer feedback before it decides to accept the proposed amends. Current EU antitrust rules would mean that such modifications would mean no infringement nor fines – which could reach up to 10% of the company’s annual turnover.

While Amazon said that it was pleased with the latest agreement, it does disagree with the EC’s preliminary assessment. The company argued that e-books are not a separate market as they compete directly with printed books, as well as other forms of media.

If accepted, Amazon’s offer would apply across Europe for the next five years.

The EC is also heavily involved in investigating Amazon’s tax arrangements with Luxembourg. A probe launched in 2014 is assessing the firm’s alleged tax avoidance scheme whereby it pays virtually zero tax on profits from its European operations. In May 2014, it was revealed that the company only paid £4.2 million in tax on £4.3 billion of retail activity during 2013.

In preliminary findings in January 2015, the EC suggested that Amazon was breaking the law in a ‘sweetheart tax deal‘ with Luxembourg. Amazon has since claimed that it has implemented a number of changes across Europe, including in the United Kingdom, Germany, Spain and Italy, in order to ensure that future sales are managed and taxed domestically.

Amazon has also been tangled in antitrust disputes regarding audiobooks. Since 2003, Amazon’s Audible solely held ownership over all audiobooks hosted on iTunes. Earlier in January this year, the EC confirmed that Amazon and Apple had agreed to put an end to the exclusivity agreement, opening up iTunes to content from other third-party retailers.

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