By Roger Tagholm
That curious phrase “most favored nation’ (MFN), currently receiving so many mentions because of the European Commission anti-trust investigation into Amazon, is an odd concept. Amazon, in common with any business, does not like to go public with its trading terms. These are, quite rightly, a confidential matter between itself and the publisher with which it is doing business. But if MFN clauses give Amazon the right to be informed of more favorable or alternative terms offered to its competitors and/or the right to terms and conditions at least as good as those offered to its competitors, then surely that means Amazon potentially knows the business arrangements of scores of publishers with its competitors. Can that be fair? Is it even factually correct? Wouldn’t it mean that Amazon has eyes in every back office? Imagine if we all had eyes in Amazon’s back office? How would it like that?
If this is the case, then the arrangement doesn’t look like a Most Favored Nation clause, more like a Most Favored Company clause. Or perhaps it is still a Most Favored Nation clause – only the Nation is Amazon. But, to repeat: how would Amazon like it if this were reversed? What if publishers everywhere knew Amazon’s business arrangements with everyone else?
Where does the term “Most Favored Nation” come from? It seems that back in the 18th century, Britain was Amazon and the US was effectively Penguin Random House. In 1794, the Treaty of Amity, Commerce and Navigation, Between His Britannic Majesty and the United States of America, was signed, under which:
“It is agreed, that no other or higher Duties shall be paid by the Ships or Merchandize of the one Party in the Ports of the other, than such as are paid by the like vessels or Merchandize of all other Nations. Nor shall any other or higher Duty be imposed in one Country on the importation of any articles, the growth, produce, or manufacture of the other, than are or shall be payable on the importation of the like articles being of the growth, produce or manufacture of any other Foreign Country.”
The so-called Jay Treaty – after the chief negotiator for President Washington, John Jay – was drawn up to settle outstanding problems remaining after the Treaty of Paris that ended the American War of Independence. Rather like disputes between Amazon and publishers today, each side made various compromises. The British agreed to leave certain forts and compensate US ship owners, and the US gave Most Favored Nation trading status to Britain.
Each major group has a John Jay figure today, poring over the detail. Fortunately, we’ve avoided the warships coming up the Hudson. For now, at any rate.