|Amazon pays $1,500 in daily fines in defiance of French law|
Amazon defending right to compete
| 1:12 am on Jan 16, 2008 (gmt 0)|
|PARIS: The online retailer Amazon.com said Monday that it would pay €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, said Xavier Garambois, director of Amazon's French subsidiary.
Amazon.com is challenging French competition law [iht.com]
| 1:04 pm on Jan 16, 2008 (gmt 0)|
<snip> Oops - got a bit political there <snip>
Why is it that corporations can so easily defy court rulings? Surely the legal system is at fault if even respected company can flaunt the law.
[edited by: Receptional at 1:07 pm (utc) on Jan. 16, 2008]
| 1:27 pm on Jan 16, 2008 (gmt 0)|
The reason for the law is to prop up the long-tail book sellers who otherwise would lose all their bestseller income and become significantly less viable, meaning that French people would have difficulty getting any thing but bestsellers.
Now, Amazon.fr have a much longer tail than any other book seller in France and so they are actually working in the spirit of the law by bringing long tail books to every remote corner of France, even tiny villages many kilometres from a physical book seller.
Surely there is a case for an exemption from the law applied to any retailer who undertakes to keep a reasonably priced long tail range. In fact, it would provide an incentive for 'supermarkets and the like' to start stocking a substantial long tail of books just to be able to discount bestsellers, something they would never even consider now.
| 2:12 pm on Jan 16, 2008 (gmt 0)|
I don't think countries should change their laws just to support a company that received a run of luck and thinks it can dictate "competition" it deems fair while ignoring everyone else.
By that i mean bravo to France for being less in love with corporate greed and more involved with protecting local retailers in a fair market.
Not every company is a publicly funded company with billions in its purse to burn away the competition by offering incentives the locals can't compete against.
has absolutely nothing to do with long tail books or keeping them out of the market and everything to do with keeping that market fair.
France is after all protecting its own interest as any free nation should.
| 4:13 pm on Jan 16, 2008 (gmt 0)|
Good for Amazon. Not to single out France - every country seems to have bureaucrats who want to make decisions on behalf of their citizens that run contrary to the interests of those citizens.
It is ludicrous to suggest that consumers have fewer book choices because Amazon offers free shipping. Amazon has expanded the choices of book buyers by orders of magnitude - not only do they offer every book in print, they have facilitated a market for used and out of print books, and are now offering self-publishing options for new books that haven't found a traditional publisher. The even offer browsing options on many titles.
Small booksellers bring nothing unique except, occasionally, a knowledgeable bookseller who can make intelligent recommendations in some topical areas. Oops, I forgot, Amazon has a zillion customer reviews and a recommendation engine that is uncannily accurate whether I'm browsing legal thrillers, coding guides, or cognitive science texts.
Governments seem to insist on trying to preserve the old way of doing things in the face of better business models. The US tried decades ago when small mom and pop grocery stores were threatened by supermarkets. The superior business model eventually won, as it always does, but in the meantime consumers paid the price. Japan's arcane retail regulations delayed high volume discounters for years. Language police in Quebec restrict the signage that can be used despite the bilingual nature of its citizens. And just about every country seems dedicated to protecting inefficient small farmers.
Just as cream rises to the top, businesses that provide better service and lower prices win in the long run. It's too bad that governments don't strive to accelerate the process instead of acting as speedbumps.
| 4:32 pm on Jan 16, 2008 (gmt 0)|
|Just as cream rises to the top, businesses that provide better service and lower prices win in the long run. It's too bad that governments don't strive to accelerate the process instead of acting as speedbumps. |
In the past that was true. Is it going to be true moving forward though?
The world economies currently expanding in double figures are hardly those with a free-markleting, non-government interfering paradigm for the foreseeable future.
But I'm with ByronM...
<snip>..."I must not get political on WebmasterWorld", "I must not get political on Webmasterworld"...</snip> :)
| 4:55 pm on Jan 16, 2008 (gmt 0)|
"I don't think countries should change their laws just to support -a company that received a run of luck and thinks it candictate "competition" it deems fair while ignoring everyone else.
By that i mean bravo to France for being less in love with corporate greed and more involved with protecting local retailers in a fair market. "
Ah favoring the national/poujadist sentiment is of course somthing that la frace never does :-) similar to the way state protected gambeling monopolies are protected in the US.
A lot of thease laws are because The founders of amazons daddys didn't go to ENA with the senior technocrats that run france.
Theres is a similar case where they tried to ban/tax a type of car that coincidentally Renault dont make any of last year.
| 6:26 pm on Jan 16, 2008 (gmt 0)|
|Just as cream rises to the top, businesses that provide better service and lower prices win in the long run. It's too bad that governments don't strive to accelerate the process instead of acting as speedbumps. |
This is where the fallacy of "Free markets" rears its ugly head. Is the big super market really providing BETTER service? Is LOWER prices REALLY BETTER?
Since i've matured i've rather come a long way in turning from a consume everything at the lowest cost and he who dies witg the most toys wins.
I'm more of a "he who dies with the most toys still still dies" and i'll add "taking down a few more people with him all because he wanted something that would support so few"
1. How is it a free market if Amazon can strong arm prices?
2. How is it a free market if amazon has enough bully power to offer free shipping?
3. How is it a free market if volume is the only way you can compete?
To answer those questions.
1. If amazon's prices are lower and volume is high - in a free market everyone would be able to reap the benefits of that fruit by lower prices. But that doesn't happen. Amazon squeezes suppliers, squeezes shippers and locks in its "Value" by strangling competition OUT through volume when in a free market that volume should help EVERYONE to compete "Freely" and "fairly" - volume should increase supply, fill in demand and lower prices for wholesale for all - but it doesn't.
If you ask me the EU/FRENCH laws "inflict" (for lack of better word) free market by taking away the leverage an uncontrollable giant such as amazon can inflict on FREE PEOPLE under the guise of "value"
2. If amazon can get free shipping why shouldn't everyone else - i don't mean it as "Right of passage" but if the prices from #1 were fair and the market was free then amazon's pricing would be something competitors could offer to bring value to the consumers if that is what "value" means
3. ties in #1 and #2. If FREE market is entirely FREE MARKET then the market as a whole would be enjoying the self-sustaining, business building, consumer support, job support, whole-sale supporting - society supporting & conscious markets. BUT THEY DON'T. Volume is dirty word for MONOPOLY in many ways.
I'm not saying its impossible for a mom and pop to get volume, to sell themselves into the privies that the corporate giants receive.
But to me it seems France knows what a free market is and Americans have a misconception that life is about consuming at all costs rather than buying what is fair.
A hard days work for a hard days pay lost its meaning in America a LONG TIME AGO if you ask me.
Now its work all day for that pay and hope you can buy what you want at the lowest cost and forget about living, thats un-important as long as it appears i get the best bang for my dwindling buck.
Blame it on the government as many people like to say. I can't blame anything about our "free economy" on antyhing but our blook lust appetite for cheap crap.
I do understand that free markets in general work, but the market needs to be free for it to be a free market. Laws don't stop freedom, they pronounce freedom - spell it out. To many "fairness" is more freedom than "Consumption" and that is where i come from at this point of my life.
[edited by: ByronM at 6:32 pm (utc) on Jan. 16, 2008]
| 6:30 pm on Jan 16, 2008 (gmt 0)|
My theory is that the decision on this heavy fine sounds so nice in French (just like everything in that language, including insults) that Amazon top heads thought it was expression of love from court's side :)
| 7:36 pm on Jan 16, 2008 (gmt 0)|
This is nothing new. When I studied marketing in College some 25 years ago we studied many such cases - the most notorious was "Tab" cola soft drink, which paid thousands of dollars of fines a day for falsely advertising "just one calorie" (when it had something like 17) just to keep from losing its market share.
A good number of years ago Taco Bell slashed all of it's prices (Remember the 49 cent tacos?) and got people flocking there in droves. They gradually raised the prices back up to the previous levels, but people got used to it gradually and business is still booming...
Amazon's risk management department/marketing department took a look at it, decided the profits made off the books and potential upsells of items that did not qualify for free shipping, the "free" publicity in the media they are getting from doing it bringing more people to them to check it out, and probably another variable or two far exceeded $1500 a day. They probably couldn't get better advertising for less money, and worldwide at that! In a few weeks when the hubbub quiets down they may quietly change their shipping rates.
Just like when I was in the computer business and we had deliveries to make. We parked wherever we needed to to get close to the entry (except handicapped) and whatever tickets we got the boss reimbursed us for and added it to the delivery costs - it was just the cost of doing business. There is a grey area here where they really aren't doing anything "criminal" they are just having to put up with an additional cost that's part of doing business.
| 7:45 pm on Jan 16, 2008 (gmt 0)|
What amazon does isn't necessarily a marketing gimmick. The free shipping was made a while back and still applies today. What the free shipping does is limit the supply - through a gimmick. When a book costs 23.95 from amazon and 32.95 from a competitor merely because of shipping people will choose amazon.
The only way amazon was able to do this was by negotiating supply contracts and lowering the price so they could absorb shipping. They also negotiate shipping so they don't pay the full retail rate as well.
In a free market the entire market would enjoy the same wholesale pricing and lower shipping costs. I mean, that is the basis for a free market.
Competition would be back on value, service, support, warranty, products, selection and everything else that used to go with value.
I think i've said my peace ;) I have nothing against amazon and in a pinch i buy from them vs even my own store. I can't even compete with 'em.
I'm not giving up, i'll carve out my niche but even then i'm sure the niche's will disapear since that is now the core focus of much of fortune 500's M&A is setup to drive over the next few years.
| 8:17 pm on Jan 16, 2008 (gmt 0)|
Government regualtions (however good intentioned) will do more harm than good in the long run. I grew up in india and know how socialism & protectionism ruined my home country for decades.
| 11:05 pm on Jan 16, 2008 (gmt 0)|
Well here in France, customers of Amazon we have even received an email to support the free delivery by Amazon and they also invite people to sign the petition they have created...
| 3:05 am on Jan 17, 2008 (gmt 0)|
The key here is to look at the reason that this law exists and to view the case in that light. This law is a response to the threat posed by supermarkets who were starting to take away the high-turnover bestselling book lines without even having poorly selling books on their shelves. It was in the public interest to curtail this so the book shops who typically depend upon bestsellers to survive could continue to offer their larger selection of literature.
To summarise - the law is to help ensure that a wide range of books remains available to French book purchasers.
As Amazon is clearly not threatening the availability of a wide range of books to French book purchasers, and is in fact making orders of magnitude more books available, it is entirely wrong to apply these laws to Amazon.
It's like charging public bus services congestion charges - whilst the bus is technically taking part in the congestion problem, in fact the bus is helping to alleviate the problem.
| 2:54 pm on Jan 17, 2008 (gmt 0)|
Good knowlege Vince
| 4:20 pm on Jan 17, 2008 (gmt 0)|
|To summarise - the law is to help ensure that a wide range of books remains available to French book purchasers. |
There's similiar laws in Canada. Heritage protection laws means that Canadian bookstores must buy their books from Canadian distributors - even if they can get the same book in the US cheaper. I believe this law is what actually prompted Amazon to open in Canada. They were shipping too many books into Canada bought from non-canadian publishers (I'm likely paraphrasing, but that's my limited understanding).
It's intended to help support Canadian artists and the publishing community (whether the gov't should be protecting them is a different argument). What it's done is that Canadian consumers have to pay higher prices on books than they might if bookstores could buy books from the US less expensively (and books are less expensive in the US, particularly with the dollar as it is).
What Canadian bookstores do to circumvent this is to just buy their books from the US and ignore the law. That's probably not the best solution, but I've never seen anyone get charged with it.
| 6:42 pm on Jan 17, 2008 (gmt 0)|
>>Is the big super market really providing BETTER service? Is LOWER prices REALLY BETTER?
Yes, in most cases. My last office was next door to a small grocery store. While I occasionally went there to buy a soda, I happily drove to the 200,000 sq ft megastore a mile down the road for any shopping involving more than one or two items. They had a vastly larger selection of products, cheaper prices, fresher fruits and vegetables... plus, they had an in-house Starbucks and were open 24/7. What's not to like?
Why not let the customers decide? If they prefer to pay higher prices for a smaller selection of products, small stores will thrive. In fact, most customers prefer a big selection with lower prices. Politicians are saying, "We know what's good for you, and will handicap the more efficient providers to make them less efficient and less attractive to you."
I have no problems with supermarkets selling books - the latest Harry Potter book is a high volume commodity (barely a book at all in marketing terms), and to define who can sell it (or the price they can sell it at) makes no sense.
I'll add again that France has no monopoly on this sort of behavior (though perhaps they try to regulate markets more than some) - at one point in the U.S., milk prices were controlled because supermarkets would use milk as a loss leader to bring in customers, which was tough on dairy stores that sold only milk products. Nobody ever asked the question, "Do we need stores that specialize in milk products? Is there a major consumer benefit from protecting these dairy outlets?" Eventually, even the politicians figured out that consumers preferred to buy inexpensive milk at supermarkets and convenience stores, and dairy stores disappeared.
Like dairy stores, small bookstores are largely an anachronism. Indeed, even the big chain stores like B&N will survive only if they can become an environment that people want to visit - coffee, conversation, browsing, etc.
It's entirely possible that Amazon itself will see the day when it can't compete in books. Once most books are distributed electronically, perhaps authors will sell downloads direct, or iTunes and Netflix will become the new Amazons. I won't be happy if regulators decide to protect Amazon's market share at that point. :)
| 4:08 pm on Jan 18, 2008 (gmt 0)|
|Yes, in most cases. My last office was next door to a small grocery store. While I occasionally went there to buy a soda, I happily drove to the 200,000 sq ft megastore a mile down the road for any shopping involving more than one or two items. They had a vastly larger selection of products, cheaper prices, fresher fruits and vegetables... plus, they had an in-house Starbucks and were open 24/7. What's not to like? |
INHO big chains seem personal by whoring out to my vices but in the end they're not exactly what you bargain for and at a larger cost than you expect.
Competition is fierce and free markets are good but i still say kudos to France. There is no reason Amazon can't compete fairly according to local law.
I support local farmers for fresh fruits & veggies. I support local grocery because its less gas and personal service. They make me birthday cakes, cook me up some good rotissery chicken and know me by name. I support the local mom and pop coffee shop because i can come in and talk and she asks about my family. If a big grocery store came i and whiped all this out, sure it would be under one roof but it would be terribly impersonable, more expensive and more in your face. The produce wouldn't be local and the jobs would be fewer and the tax base smaller. Big grocers do more with less and in the long haul that isn't necessarily better.
Same applies to amazon. DO more with less and at a lower cost than other companies and NATIONS can compete against.
Kudos to France. American style of Injustice Capitalism is not the be all end all of the ways to do business.
| 7:35 pm on Jan 18, 2008 (gmt 0)|
Didn't you know that's an oxymoron here in the States? :)
| 12:02 pm on Jan 19, 2008 (gmt 0)|
Corporate fines really ought to steadily increase to an unlimited amount the longer a company breaks that particular law (so for example the $1500 might go up by 10% every day that Amazon fails to comply).
Otherwise, as in this case, companies will rationally decide to permanently flout the law because it's the cheaper option overall.
We may or may not like this particular law, but it was drafted by an elected government and companies have to be made just as much subjects to the law as private citizens. If a company doesn't like a law, they're free to lobby for its alteration, but they shouldn't be allowed to just ignore it.
| 5:03 pm on Jan 20, 2008 (gmt 0)|
I used to visit a local book seller in Newmarket, a small shop run by a husband and wife team.
Its not there any more after a run of around 15 years it closed, free shipping? Good idea?
The problem is when you see many small stores squeezed out Amazon will put up prices, after all whose going to go against them?
| 4:52 am on Jan 21, 2008 (gmt 0)|
|Its not there any more after a run of around 15 years it closed |
It's sad to see friendly people and nice stores close down. Unfortunately, too many people focus upon doing what they do now rather than identifying upcoming threats and devising strategies to beat them. Some bookstores have introduced sofas, coffee, book clubs, etc. Others have moved online and in doing so, slashed their overheads (if Amazon push up prices in the future as many suggest, these stores will be in a good position). Yet others have moved into vanity and short run publishing for niche (nee-shh) markets.
| 1:29 pm on Jan 21, 2008 (gmt 0)|
|It's sad to see friendly people and nice stores close down. Unfortunately, too many people focus upon doing what they do now rather than identifying upcoming threats and devising strategies to beat them. Some bookstores have introduced sofas, coffee, book clubs, etc. Others have moved online and in doing so, slashed their overheads (if Amazon push up prices in the future as many suggest, these stores will be in a good position). Yet others have moved into vanity and short run publishing for niche (nee-shh) markets. |
True, some businesses just don't want to change but the fact of the matter some of them CAN'T change.
In the irony of our free market, our very financial market relies on supporting the key players instead of the little guy. Over and over you hear "The US is supported on the shoulders of small business" and to a degree thats unbearably true. Without milking small businesses for every ounce of underpaid work, underpaid salaries, underpaid employees and locking them in to niche segments they can only pray to stay competitive in the walmarts, amazons and other stores simply squeeze out the competition under the guise of "bigger = better".
Cheap labor = more profit. Cheap labor = walmart & amazon falling prices. Cheap labor = downward spiral of being able to afford decent products and getting stuck in a cycle of shopping on price alone and becoming reliant on something that may seem convenient but in hindsight has eaten us alive.
super corporations are soul less beings out to get everything they can from you. The ma and paa book or coffee shop may not be as extravagant as your super store starbucks mocha frappa machiatio chino but more often than not its an enjoyable experience, better service and a little bit more of a human experience.
The world is so "self serve" today we have forgotten what its like to work with people expecting that some corporate big brother will do it for us or that we can blame the government.
I'd say France is well beyond blaming people and well into the action phase and we Americans are so stuck on consuming everything we can that we forget the ideology we inherently accept by buying into it with our hard earned cash.
Disclaimer: I shop at walmart, amazon, target. I don't HATE where we are today, i'm just concerned about our future since it seems our current ways are impossible to sustain and that we're raising a future generation of people who will be unable to think or decide for themselves having one place that serves every whim under the guise of falling prices = pure value. Life is so much more than money. It used to be you felt accomplished from hard work and today its more you fell worn out and need to buy something to feel personal value and i sincerely think the amazons, walmarts and targets have worked very hard to tear into that aspect of humanity.
After all, if we can't sell your soul you must be a socialist! (according to many responses i've see of this topic across the internet)
| 7:00 pm on Feb 2, 2008 (gmt 0)|
This law, like so much of French law, is an irrational and sad attempt to use the legal system to maintain the status quo.
Amazon have clearly made a business decision that paying the daily fine will damage neither their profit line nor their reputation. Kudos to them.
The French had one of history's most violent revolutions ever, and have spent much of the time since trying to stop the clock, with ludicrous laws to 'protect' farmers, small business and the language: the effect of which is NOT to protect any of the above, other than to provide public money subsidies to dying businesses and inefficient farms, while trying in vain to freeze their language. As if! Vive Le Beefburger!
France probably has the most inefficient railways, banks (!) and car building industries in the world (to name but three that I know a little about), and despite being a founder member of the EU, have spent 40 years blocking other EU countries from fair competition, which would invariably result in better service - and 'foreign' victories.
[slaps wrist for getting political in WebmasterWorld]
| 2:08 pm on Feb 4, 2008 (gmt 0)|
|France probably has the most inefficient railways, banks (!) and car building industries in the world (to name but three that I know a little about), and despite being a founder member of the EU, have spent 40 years blocking other EU countries from fair competition, which would invariably result in better service - and 'foreign' victories. |
Clearly you haven't been paying much attention to american politics either. Last time i checked Amtrack is still struggling to remain in service, our banks are ineffeciently managed and losing BILLIONS on bad loans and we have spent 200+ years preventing other countries from stealing our superpowers at all costs as well.
I guess my response is that no one is perfect and capitalism believe it or not is NOT a form of representative government (or any government at all).
You would be kidding yourself if you didn't believe that Amazon gets millions (if not billions) more in subsidies than those farmers. Everything from municipalities, cities, townships, states and governments giving them tax abatements, building permits, deferments and other incentives. Its pretty crazy how much of a blind eye we Americans turn.
I mean the biggest issue i consistently hear the righties complain about is the "hand out society".. i'm sorry folks, but corproations get more handouts than REAL living/eating/breathing people do if you look at the grand scheme of things.
Yet we some how get so turned around people believe they owe america to capitalism when we simply owe america to democracy which is dwindling day by day as long as we let the powers that be protect themselves under the guise of unfettered capitalism.
[edit - not afraid to speak frankly ;) and i consider myself independant thank you]
[edited by: ByronM at 2:09 pm (utc) on Feb. 4, 2008]
| 10:43 pm on Feb 4, 2008 (gmt 0)|
I don't disagree with a word.
But (a) I'm not American, and (b) I think this thread is about France.
And (c) While Amazon doubtless gets tax breaks (as big corporations do in every Capitalist country), the French system of supporting dying industry is without parallel anywhere in the west.
But this really isn't the place to get in real depth on France's commitment on unlevel playing fields (which is simple xenophobia).
Let's just agree to differ. I'm with Amazon on this, 100%.A fine company providing a great service.
I'm proud to be a customer, proud to be an affiliate - and I won a whole £1.00 when the Dot Com Bubble Burst, and Amazon went from strength to strength. A true international Internet success story that has led the way in revolutionising Internet shopping - and countless companies have benefited, as Amazon became one of the first "trusted" shopping sites, and is, to this day, most shoppers intro to online shopping.
Sorry folks - I'm a real fan.
And if I was American, by gum I'd be a shareholder too! :)