France passes so-called 'Anti-Amazon' Law

The French parliament passed an amendment that would ban Amazon from offering a combined discount and free shipping to customers in France.

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    A box from Amazon.com is pictured on the porch of a house in Golden, Colorado in this July 23, 2008, file photo.
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The French parliament this week passed a law that would ban online websites from offering free shipping in combination with a five percent discount to customers in France.

The law has been unofficially dubbed the "Anti-Amazon" Law. The much-debated piece of legislation was not officially aimed at Amazon, but the e-commerce giant certainly stands to lose the most from the new regulations.

The root of the new law stems from the "Lang Law" passed in 1981, when the French Minister of Culture established a fixed price on books in France in order to help independent bookstores in that country compete against the large chains that were beginning to take over the market at the time, according to TechCrunch News.

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The 1981 law allows for discounts of up to 5 percent, which was deemed an acceptable price difference. Similar price-fixing laws designed to protect independent bookstores later began to pop up all over Europe, with reasonable success.

Amazon and other online retailers, however, quickly realized they could offer 5 percent discounts more consistently than independent bookstores, and could offer free shipping on top of the discount in order to draw more purchases. In addition to these advantages, Amazon bills out of Luxembourg, using the country's low sales tax rates to further drive down the price and gain market share over the past few years, reports TechCrunch.

Because of Amazon's increasing domination of the book market, many French officials felt the nation's 3,500 bookstores, including 600 to 800 independent ones, were at risk. In fact, according to TechCrunch, France’s second largest bookstore chain, Chapitre, filed for bankruptcy last December.

In an attempt to circumvent losses like this and even the playing field between Amazon and traditional booksellers, an amendment to the original law, banning the combination of free shipping and the 5 percent discount, was proposed. This amendment, which has unofficially come to be known as the Anti-Amazon Law, finally passed the French Parliament after months of debate.

Current French Minister of Culture Aurelie Filippetti is reportedly pleased with parliamentary approval of the law. She has been a vocal critic of Amazon's policy of selling books at a loss, and is quoted in The Raw Story as saying “Once [Amazon is] in a dominant position and will have crushed our network of bookshops, they will bring prices back up.”

The amendment, which is expected to be signed into law by President Francois Hollande within the next two weeks, comes at a particularly problematic time for Amazon, and not just in France.

In the United States, the company is facing criticism for its ongoing feud with Hachette. When the publisher refused to accept new terms from Amazon regarding its sales, Amazon responded by slowing the shipping on all Hachette books on its website, including popular titles like "The Silkworm," by J.K. Rowling.

In Germany, Amazon's largest market outside the US, several publishers have accused the company of violating competition laws regarding e-book sales, calling on their federal antitrust authority to "open an investigation and halt Amazon's actions," according to NBC. This comes only a few weeks after concentrated strikes in that country over labor conditions and pay.

Despite discontent with Amazon's policies in America and Germany, however, France might now be in a position to deal the most significant blow to Amazon's domination of the book market with the Anti-Amazon Law, especially if other countries choose to follow their example, as happened with the original Lang Law in 1981.

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