US House Judiciary Concludes Amazon eBook Contract Clause Stifles Competition
The U.S. House Judiciary Committee recently concluded Amazon uses its dominant position in e-commerce as leverage to require “Most-Favored-Nation” clauses in its contracts with the Big Five publishing houses –
- Hachette Book Group
- Harper Collins Publishers LLC
- Macmillan Publishing Group LLC
- Penquin Random House LLC
- Simon & Schuster Inc.
This clause is meant to prevent the Big Five publishing houses from partnering with competing retail sites (e.g. Apple Books, The Nook Store) and offering eBooks at prices lower than the pricing offered by Amazon. If not for these agreements, the Big Five could sell eBooks at lower prices on their own websites or through other online retailers that offer lower fees and commissions.
Amazon has a history of using MFN clauses to ensure that none of its suppliers or
third-party sellers can collaborate with an existing or potential competitor to make lower-priced or innovative product offerings available to consumers.
As a result of these contracts with the Big Five, Amazon may have monopolized the eBook market and forced consumers who purchased eBooks through online retail platforms other than Amazon to pay higher prices.
Investigations Underway to Assess Legal and Economic Impact To Consumers
In response to these findings, several investigations have been launched that seek to determine the legal and economic impact of these agreements on the prices of eBooks sold by Amazon’s competitors.