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EU backs e-book price fixing deal with Apple and four other publishers

Public SectorNews
by Stephanie Mlot, 14 Dec 2012News
EU backs e-book price fixing deal with Apple and four other publishers

The European Commission's year-long antitrust investigation into eBook pricing collusion ended yesterday, when it adopted a proposal from Apple and four book publishers that offers more pricing freedom to eBook retailers like Amazon.

Apple, Simon & Schuster, Harper Collins, Hachette Livre (Lagardère Publishing) and Verlagsgruppe Georg von Holtzbrinck (Macmillan) agreed to stop using the agency model, whereby the publishers rather than the retailers set eBook pricing, for the next five years. They will also give eBook retailers the freedom to set prices, subject to certain conditions, for the next two years.

"The commitments proposed by Apple and the four publishers will restore normal competitive conditions in this new and fast-moving market, to the benefit of the buyers and readers of eBooks," said Joaquin Almunia, the EU vice president in charge of competition policy.

A Hachette Livre spokesman stated that the company is "involved in productive conversations with our eBook agents in order to conform our contracts to the terms of the settlement." Retail prices of eBooks in France, the publisher's key market, will be unaffected due to the fixed-price law voted on earlier this year, he explained.

"Our goal has always been to give consumers the widest choice at the fairest price while simultaneously ensuring that authors receive a fair reward for their endeavour," Harper Collins announced. "We will continue to pursue this goal while complying with today's Commission decision."

Simon & Schuster declined to comment on the settlement, while Apple and Macmillan did not immediately respond to requests for comment.

In December 2011, the EU opened a formal investigation into Apple and five publishers, then including Penguin, exploring whether the companies colluded to restrict eBook competition. Penguin, currently under investigation, was excluded from Thursday's settlement, since the publisher chose not to offer commitments to the EU, according to the Commission. The EU said it is "engaged in constructive discussions with Penguin," however.

"While each separate publisher and each retailer of eBooks are free to choose the type of business relationship they prefer, any form of collusion to restrict or eliminate competition is simply unacceptable," Almunia said.

US officials conducted a similar investigation and brought charges in April over an alleged "illegal conspiracy" involving eBook price fixing. Apple, Macmillan and Penguin are fighting the charges, while Hachette, HarperCollins, and Simon & Schuster agreed to a proposed settlement. A New York judge approved that settlement in autumn.

The EU said it "has worked closely with the US Department of Justice (DOJ) in this case in order to seek a global solution to the identified horizontal concerns."

Apple last year introduced a subscription billing platform for the App Store, through which the company takes a 30 per cent cut of revenues. The move prompted Amazon and other eBook providers to pull in-app purchase support from their iOS apps, in order to avoid handing over the required cut.

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