As a result, French regulators are passing laws aimed at securing a fair share in the ecommerce market for local bookstores.
On 26 June, 2014 regulators issued laws which protect small to medium enterprises, particularly brick-and-mortar bookstores from Amazon’s competitive business model. Amazon accepted the terms of the legislation in question and, as a result, it introduced a shipping fee to its customers under duress, of just EUR 0.01.The measure forbids Amazon to make combined offers of free shipping with 5% discounts on online book sales, thus preventing them from underbidding local bookstores.
Amazon argued its low shipping fee decision by claiming that the French regulators do not allow the company to offer books at 5% discount on the price of books and, as such, a fixed tax representing delivery costs had to be added.
Despite the oppressive regulations against Amazon, there have been rumours that the US company’s market share will dominate, relegating independent bookstores to a mere 40% share by 2017. This also presents a problem for local jobs and economic innovation in terms of small to medium businesses (SMBs), since competition between them will be mitigated by Amazon on all products.
Due to the financial crisis, bank loan constraints have been felt mostly by smaller retailers, policies that constrain smaller business while showing leniency for tax avoiders does not make for a competitive market place, since companies with access to deep capital markets are able to substitute bank loans.
Amazon is also under the regulatory eye of the EU, mainly in what concerns the company’s offshore tax arrangements with Luxembourg in 2014.
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