Amazon probed for e-books as EU widens scrutiny of US tech

[LUXEMBOURG] Amazon.com Inc faces a probe into its e- book contracts with publishers as the European Commission's competition chief added to a growing list of fights with US technology companies.

European Union regulators said the world's biggest online retailer may be squeezing out rival distributors of e-books by insisting that publishers can't give them better terms.

"Amazon has developed a successful business that offers consumers a comprehensive service, including for e-books," EU Antitrust Commissioner Margrethe Vestager said in an e-mailed statement on Thursday.

"Our investigation does not call that into question. However, it is my duty to make sure that Amazon's arrangements with publishers are not harmful to consumers."

The EU's antitrust watchdog said the Seattle-based company includes clauses in its contracts that "require publishers to inform Amazon about more favorable or alternative terms offered to Amazon's competitors" and to "ensure that Amazon is offered terms at least as good as those for its competitors."

The e-books probe is Amazon's latest clash with the EU after it was embroiled in an investigation into tax loopholes for multinationals including Apple Inc. Since taking office in November, Ms Vestager has also sent Google Inc a formal antitrust complaint for shutting out rival search engines and signaled a clampdown on possible barriers to e-commerce and digital content including Hollywood studios' pay-TV deals.

Amazon, now the largest distributor of e-books in Europe, helped pioneer the market with the introduction of the Kindle device in 2007.

"Amazon is confident that our agreements with publishers are legal and in the best interests of readers," the company said in an e-mailed statement. "We look forward to demonstrating this to the commission as we cooperate fully during this process."

The EU said it will analyze whether the clauses inserted by Amazon prevent competitors from developing new products and "whether such clauses may limit competition between different e-book distributors." This behavior may violate "EU antitrust rules that prohibit abuses of a dominant market position and restrictive business practices," regulators said.

"The contracts may operate to restrict competition if each distributor has to tell Amazon about more favorable terms," said Tim Cowen, a lawyer at Preiskel & Co LLP in London. "For example if a publisher/e-book distributor got a better deal elsewhere and Amazon had a right to match that deal then Amazon might become an 'entrenched supplier'."

Competition regulators have taken enforcement action against similar causes. Priceline Group Inc.'s Booking.com settled antitrust probes in France, Sweden and Italy in April by agreeing to drop clauses preventing hotels from offering lower room prices on competing online travel services.

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