Amazon.com is challenging French competition law

[BERIGAN]

http://www.iht.com/articles/2008/01/14/technology/amazon.php

[Chuck Nessa]

dang!

[Tom Storer]

Personally, I like the law itself--which regulates discounting so that chains and supermarkets can't take advantage of economies of scale to put independent booksellers out of business. It's tough on chains and supermarkets, poor things, but it does mean that there still are independent booksellers in France, who play an important role in book distribution. Every quartier has its librairie, and booksellers are generally passionate and knowledgeable about books, can advise their customers whose tastes they get to know, and from whom you can easily order books that might not be stocked.

It does seem contentious to count free delivery as a discount, since as I understand it the law makes reference to the price of the book itself, not the total transaction. But the intent is clearly the same: help small bookshops against huge online sellers, the same way it helps them against chains and supermarkets. Counter to free market principles, but in practice this law has results that I appreciate.

If a similar law applied to the price of CDs, maybe we'd still have lots of independent CD shops--I fondly remember a jazz specialist shop from the 80's, now long gone. They're now few and far between, and mainly rely on second-hand sales. For the rest it's big chains, orders direct from the label... or Amazon.

[The Magnificent Goldberg]

Tom is correct in everything he says. In the sixties, records were sold at standard prices. Every record company used the same price structure and all retailers were compelled to sell at thoses prices. In the mid-sixties there was pressure from retailers to be allowed to discount. EMI's 45s from that period had this message on the label: "sold in UK subject to resale price conditions see price lists". But what was known as "retail price maintenance" was declared illegal in the late sixties. Everyone said that this would mean the death of independent retailers - it didn't but it is true that many left the business. And the range of choice became smaller.

But things changed. The advent of retailers like Tower increased the range of choice available. But only in large markets. These retailers are now falling by the wayside, under pressure from on-line retailers. But the range of choice at Amazon is greater than ever.

The argument about the French law (or the British system of retail price maintenance, for that matter) not being anti-competitive because it applies to all retailers seems so much bunk to me. That law seeks to limit the extent to which retailers can compete with one another. And it is said that this is in the interest of the consumer having greater choice. It seems to me that there is a sub-text in operation which is another example of the public being told by the ruling classes what is good for them. "We" know the public wants cheap trash and pandering to that desire will drive out of the market all this good stuff "we" think is of artistic or intellectual merit.

Well, bollocks to that. I'll be sorry to see those bookshops go. As sorry as I have been to see the indie record shops go - those that haven't been clever enough to find a way to survive. And some have been and are still surviving. Message: if you aren't good at it, get out of the market - don't look to the ruling classes and government to keep your arse out of the fire.

MG

[Guy Berger]

My attitude is -- if people want indie bookstores or record shops, they should feel free to support them by paying a higher price at those places. I don't see why those same people insist on passing laws that force OTHERS to subsidize their aesthetic preferences over shopping venues.

In these discussions of small vs big retailers, it doesn't seem like policymakers consider what consumers actually want.

One final comment -- let's take it as a given that the French government wants to keep independent retailers. This policy is still a suboptimal means for achieving that end.

Guy

Edited January 15, 2008 by Guy

[Tom Storer]

That law seeks to limit the extent to which retailers can compete with one another. And it is said that this is in the interest of the consumer having greater choice.

Greater choice is not the only issue--in France, independent booksellers are seen as providing a cultural service that is not provided by impersonal chains and huge supermarkets. The idea is that small bookshops are part of the cultural fabric of society, a place of cultural exchange and discovery that should be available to get people involved in books and reading.

It seems to me that there is a sub-text in operation which is another example of the public being told by the ruling classes what is good for them. "We" know the public wants cheap trash and pandering to that desire will drive out of the market all this good stuff "we" think is of artistic or intellectual merit.

In France, that isn't quite the subtext, or not the only one.

On the one hand, France, like many Western European countries (the continental ones, anyway), believes it is a legitimate role of government to support "culture" rather than letting the market sort it out and leaving it at that. On the other, rather than imposing diktats on the resentful masses, the French government is reacting to pressure from groups of constituents.

Therefore I don't necessarily agree that it's a question of "ruling classes" meddling with "what the people want." For one thing, the "ruling classes" are elected officials, not hereditary monarchs, and on the other, "the people" in France want those elected officials to do things for them. A more accurate assessment is to recognize that the government is reacting both to high ideals (although you may disagree with them) about how to keep a healthy cultural life in society and to corporatist pressures from all sorts of professional and industrial groups. No politician here wants to be tarred with the brush of "favoring corporations over the little guy." In the current case little guy = friendly neighborhood bookseller and corporation = faceless giant Amazon. On one level it's politics as usual: there's probably more political capital to be had at the moment from forcing Amazon to charge for shipping than to be seen as helping drive independent bookshops out of business.

Another point that I haven't quite worked out in my head that there isn't a single, monolithic public (I, for example, want snooty intellectual books and cheap trash). One public, people who are solely interested in formulaic crime or sentimental novels or self-help books or whatever, would prefer lower prices, period, because in any case there will always be plenty of those around. Another public, people who are interested in "literary fiction," want that niche to be protected because they fear it would be greatly reduced otherwise. My wife works in publishing, and she says there is typically greater choice in a French independent bookshop than in a British chain, which tends to support this view. They can just buy online, you may reply, where choice is vast. But while that's good for people who know what they're looking for, it doesn't duplicate the experience of being able to browse in a bookshop and talk about books with the person who runs the shop.

I don't know. I understand the objections but I don't think letting the market decide with no government role at all is necessarily going to produce a better result than having some government input, based on ideas about the public good that in this instance don't contradict public opinion, far from it.

[robviti]

so if a government wants to support a vital part of culture - let's use jazz music, for example - they should do it by enacting laws or practices making it more difficult/costly for other genres like pop music to profit? if the french government wants to offer support to the indie bookshops, why don't they subsidize with lower taxes, public funding, etc., rather than penalize others who are in a position to compete? i guess i already know the answer: the people probably wouldn't agree to have their taxes spent that way. it's more acceptable to take from the other guy than to give to your own. but if this is true, isn't that the will of the people?

[Tom Storer]

But if they subsidize booksellers but not chains or supermarkets, doesn't that also penalize chains and supermarkets? Six of one, half dozen of the other, no?

I believe the thinking is that big chains and supermarkets have such an advantage over independents in their very size that laws such as the one in question will not do serious damage to them while nonetheless sheltering the independents. It's a question of Amazon making a little less profit or X number of bookshops closing their doors.

Anyway, it's an uphill battle for independents even with this law on the books.

[The Magnificent Goldberg]

If firms are prevented from competing on price, or inhibited to a maximum of 5%, that is anti-competitive. There can't be two ways about it. The notion that, since the rule applies to all, it isn't anti-competitive only works if the assumption is made that anti-competitive actions have to favour one side or another. That particular interpretation of anti-competitive behaviour is the legacy of protectionism, which did indeed seek to favour one side (a country's own firms) over another (every other country's firms). This is the sort of thing the EC's Competition Directorate was set up to stop, and does a pretty good job at - hence the impossibility of the French government subsidising the indies. But it has, clearly, skewed European law away from a broader and more rational interpretation of what is anti-competitive.

But of course, competition on price is not the only form of competition, though it's probably the easiest. There are as many ways to compete as there are people with new bright ideas on how to make money. Ruling out one form of competition does not rule out other forms. Germane to this issue are:

attractiveness

accessibility

quality (in terms of well informed staff)

friendliness

and so on. Now we can say - and I think it may well be generally agreed - that the French indie bookshops win on all or most of those points. By preventing competition on price, the French government is actually loading the dice against the big retailers, because the only competition that is allowed is what the indies are good at. And that is anti-competitive even on the skewed EC interpretation.

Now, on to the Amazon business - you have to know what you're looking for, you can't just browse or chat to knowledgeable people. Same's true of buying jazz CDs, ain't it? And the hints and advice and friendliness I get from here - Organissimo - are far superior to anything that I ever got in an indie record shop. There are ways of getting yourself where you want to be and they do not have to be the ways you're told by those in power that you have to use. In fact, a good rule in life is to ignore what you're told by those in power; one I have always felt the French were better at following than the people of most nations.

MG

[The Magnificent Goldberg]

Bebop started this thread linking to a very interesting discussion of the history of anti-chain/big box protest. The whole article is germane, but the section on the book trade is particularly so.

http://www.organissimo.org/forum/index.php...c=38850&hl=

MG