Amazon Settles EU Commission Investigation into MFN Clauses

May 4, 2017

Cleary Gottlieb assisted Hachette Livre and HarperCollins in the European Commission’s investigation into certain business practices by Amazon in the distribution of electronic books, and on May 4, 2017, the EC accepted the commitments offered by Amazon.

The EC investigated the so-called “most-favored-nation” (MFN) clauses included in Amazon’s contracts with publishers, which required publishers to offer Amazon terms and conditions similar to or better than those offered to its competitors.

In June 2015, the EC opened the investigation to verify whether Amazon had abused its dominant position by relying on contractual clauses that appeared to safeguard it from competition. According to the EC, such clauses could make it impossible or very difficult for other e-book distributors to enter the market, and for publishers to distribute their products through alternative platforms.

As part of the 2017 commitment package, Amazon will no longer enforce or introduce MFN clauses in agreements with publishers. The commitments apply for a period of 5 years and to any e-book in any language distributed by Amazon in Europe. These commitments will contribute to fair competition in the platform economy.