walkitout (walkitout) wrote,
walkitout
walkitout

A Few Remarks on Germany's Competition Law

First: why?

http://the-digital-reader.com/2014/06/24/amazon-faces-antitrust-complaint-germany/

or

http://www.nytimes.com/2014/06/25/business/international/amazon-accused-in-Germany-of-antitrust-violation.html

or

http://www.spiegel.de/kultur/literatur/boersenverein-legt-beschwerde-beim-bundeskartellamt-ein-a-977153.html

All basically say the same thing: a publishers' trade organization has laid a complaint against Amazon for behaving badly, with the German agency regulating competition.

From NYT coverage: "The association, which counts 3,800 members, argues that while Amazon does not fit into traditional definitions of a monopoly, its sheer size and the dependence of publishers on the services that it offers to readers, gives it tremendous clout. The publishers contend that Amazon’s action should be considered “extortion.”" and "Further, the association argues, because many readers use Amazon as a modern card catalog to explore which books are available, if an author is not listed, a reader would assume that writer has not published any books. “Whoever is not listed on Amazon doesn’t exist in the eyes of a reader,” the association said."

Here is a summary of German competition policy:

http://www.thebhc.org/publications/BEHprint/v021/p0257-p0269.pdf

It is helpfully broken up into before and after our Occupation.

Like many developed and developing nations who were never England or the US, the German government encouraged vertical integration in firms to improve their position in the world economy. They also encouraged cooperation among firms for much the same reason. When we could write their law with a heavy hand, we forced Germany to unwind this vertical integration in the name of open/free trade (the article does not mention war-specific issues involving these large vertical enterprises, altho I suspect my husband will, because he read a book about Krup, which I've probably spelled wrong).

So the first point to notice here is that the German government inter-operates with German firms historically and today in a way that just doesn't happen in the good ole U.S. of A. The only thing that changed that was us, and it didn't exactly stick. The law we wrote was replaced by a different law in 1958. Under that law, cartels are prohibited but with exemptions (so that's different from the US, where cartels are just per se no go). As with US law, German law seems to recognize that in the early stages of a market, there might be a high degree of concentration. This law did not control mergers. After 1973, there was another law that did control mergers, but that would appear to not relate to Amazon, as a single firm. While the law attempts to curb abuse, it does so through merger control to prevent high degrees of concentration; I don't see anything obvious here relevant to the kind of market dominance which Amazon, er, enjoys.

There is also a pre-WW1 law that may apply, if Amazon's business practices are found to violate "good morals", including non-performance. That is, Amazon's failure to ship Bonnier or Hachette product promptly as part of a negotiation might be construed as non-performance and thus against this law. If this were found to be the case, Amazon might be subject to an injunction (hey, perform, you monkey!) or required to pay damages. I'd bet this is the legal theory that the complaint to the Bundeskartellamt is operating under.

I'm not a lawyer. I'm not German. My German is really not up to this task, but I'm gonna pursue it for a while anyway. Expect edits, or a follow-on post.

But I will say this.

What kind of damages do you think anyone might deserve as a result of a Bonnier published author not being listed in Amazon.de, or suffering from reduced sales over a period of time? Damages for lost sales at Amazon? Calculated how? Damages for lost sales ANYWHERE? Remember, the argument is that people would look it up, not find it, and assume it didn't exist, so lower than expected sales could be attributed to Amazon, even if the lost sale was at a bricks and mortar store. Or the putative lost sale. And should that be for the author or for the publisher or the bricks and mortar store?

Do you think Amazon should receive an injunction requiring them to list Bonnier books, even if they are unable to reach contractual agreement with Bonnier on the terms under which those books will be sold to Amazon and/or listed to the public? Should they be required to _sell_ books that they are unable to come to agreement with Bonnier on a price to be paid?

We have case law in the United States about whether a company can be required to continue to engage in business at which it cannot make a profit. The question arose completely legitimately (railroads, as my regular readers already know) -- this isn't some weird hypothetical. Back in our weak federal government days, local and state governments were fully prepared to _force_ corporations to engage in business that was guaranteed to be unprofitable at the rates those governments said they could charge. I don't know whether or not this dispute is generating a comparable situation, but it's at least possible.

At least here in the US, lots of people have the right to call up their State Attorney General or the FTC (or go to their website) and file a complaint. Human people and corporate people and NGO people and trade association people. I'm assuming that it works roughly the same way in Germany, altho I wouldn't be too surprised if you told me that the German government is a wee bit less open to random members of the general public clogging up the works with demands and requests and general craziness. I think that the trade association's complaint is exactly that: a complaint. I think the legal theory it is operating under is kinda suspicious (given that Amazon has essentially reverted to its earliest business model for fulfillment, I have a hard time construing that as "non-performance", and arguing that the catalog is somehow a public utility for looking up what books exist just blows my tiny little mind. I mean, I know I worked hard to make it that way. And every time someone told me they quit paying Bowker and just used Amazon instead warmed the cockles of my heart, whatever a cockle is. But regulating the catalog as a utility? Are you fucking kidding me?). I think the idea that anyone is going to like the possible remedies, even if the theory were accepted, is risible.

But hey. I'm not a lawyer. And I'm not German. We'll just have to watch this play out.

Okay, just _one more thing_, says the woman in the wrinkled coat. If the Bundeskartellamt did cough up a favorable opinion and an injunction or damages award, could Amazon appeal through WTO? Because _that_ would be hilarious.
Tags: our future economy today
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