The European Commission has this week added another US tech company to its list of 'investigatees': it has launched a formal antitrust investigation into Amazon, focusing on its contracts with book publishers.
Once again, most favoured customer clauses, which require publishers to inform Amazon about more favourable or alternative terms offered to Amazon competitors and to offer Amazon similar or better terms and conditions (including on price), seem to be central to the Commission's concerns. These are the kinds of provisions which have been condemned by some EU Member State authorities in the numerous online hotel booking investigations.
MFC clauses have also been looked at in a number of EU Commission cases, and it is clear that they can give rise to antitrust concerns in the EU:
- Opodo: one of the proposed features of this online travel agency (a joint venture established by nine European airlines) was that it would have access to the airlines' lowest fares made available to other online travel agencies. This created a risk of foreclosure on the travel agency market and the Commission ordered the removal of MFC status granted to Opodo by its airline shareholders.
- Hollywood studios: MFC clauses in agreements between Hollywood studios and European broadcasters entitled the studios to the most favourable terms agreed between a pay-TV company and any one of them. Following a Commission investigation, six of the studios dropped the MFC clauses from their agreements.
- E.On/Gazprom: MFC clauses that obliged Gazprom to offer similar conditions to E.On as it offered to E.On's competitors in Germany were removed from supply agreements following a Commission investigation.
- Universal/EMI: one of the conditions for approving this merger was securing a commitment not to include MFC clauses in Universal's favour in any new or renegotiated contracts with European digital customers for 10 years. • E-books: the MFC clause provided that if a retailer other than Apple offers a lower price for a particular e-book, each publisher had to match that retail price in Apple's iBookstore, or refuse to sell to the other retailer. Following the Commission's investigation, commitments were given to remove the clause and not to enter into any other sort of MFC clause.
Determining whether MFC clauses give rise to antitrust risks will depend upon factors such as: market structure (e.g. number of participants and barriers to entry); whether the parties involved have market power; and the nature of the MFC clause (e.g. price match or price beat).
If you would like more information or to discuss these issues, please contact email@example.com
Sign up to our email digest