Amazon Challenges French Law on Pricing

By Victoria Shannon

In a significant challenge to French law, the online retailer Amazon.com said it would pay euro 1,000 a day in fines, rather than comply with a court ruling upholding French limits on price discounts for books.

The company decided to pay the daily fine worth $1,500 rather than eliminate its offer of free shipping on book purchases, Xavier Garambois, director of Amazon’s French subsidiary, said Monday.

“We are determined to follow every avenue available to us to overturn this law,” Garambois said. The company appealed the ruling Friday.

Jeff Bezos, founder and chief executive of the company, based in Seattle, was equally defiant in a weekend e-mail message to French customers.

“As unbelievable as it appears, the free delivery of Amazon.fr is threatened,” he wrote in the French-language note.

“France would be the only country in the world where the free delivery practiced by Amazon would be declared illegal,” the Bezos e- mail concluded, inviting consumers to sign an online petition. By Monday evening, more than 120,000 people had clicked in favor of maintaining free delivery.

Of Amazon’s $3 billion in third-quarter revenue, about $1 billion came from outside North America. Amazon does not break down sales or active users, which total 72 million globally, among seven international operations.

Amazon’s defiance has the potential to backfire. Amazon must pay the fine for 30 days if it continues to violate the court order, at which point the court will reconsider the fine and then extend it, lower it or raise it.

Cedric Manara, a law professor and e-commerce specialist at Edhec, a French business school in Nice, said he would not be surprised if the court raised the penalty, and that Amazon “had no chance” with its appeal.

The law is “really clear,” Manara said. “There is no way you can read the text to find a different result. And the court would have evidence of the firm’s deliberate will to violate the law.”

The Lang law was passed in 1981, a time when booksellers were losing sales to supermarkets and other new competitors. It was meant to assure the French public equal access to a wide variety of books, not just heavily marked-down publications.

The law has twice come before the European Court of Justice, and both times it has been affirmed. The law is not considered anticompetitive because all book retailers are held to the same standard, Manara said.

In the Amazon case, a union of French bookstores won its lawsuit against the company last month over the free-shipping offer, which applies only to deliveries within France on book orders of more than euro 20.

The Tribunal de Grande Instance in Versailles awarded the bookstore association euro 100,000 and ordered Amazon to start charging for delivery. The court said that if the cost of Amazon’s delivery reduced the price of a book more than the 5 percent allowed by law, then the sale violated the law.

Still, Amazon said it could triumph. “As a company, we are very passionate about this,” said Stephanie Mantello, of Amazon’s office in Paris. “We are doing everything we can to maintain our free- shipping offer.”

Originally published by The New York Times Media Group.

(c) 2008 International Herald Tribune. Provided by ProQuest Information and Learning. All rights Reserved.