Apple, publishers settle in EU e-book antitrust case

Antitrust regulators have accepted a settlement offer by Apple and four publishers to resolve an investigation into alleged e-book price fixing.

Kindle vs. Nook vs. iPad
Sarah Tew/CNET

Apple and four major publishers have settled a case with European antitrust regulators after negotiations began in September, ending an ongoing row over e-book price fixing.

The iPhone and iPad maker, along with HarperCollins, Hachette Livre, Verlagsgruppe Georg von Holtzbrinck-owned Macmillan, and CBS-owned Simon & Schuster (CNET and ZDNet are also owned by CBS), all agreed to legally binding conditions that would ease pricing restrictions on Amazon and other e-book sellers.

A fifth publisher, Penguin -- owned by U.K. group Pearson -- is still under investigation as the publisher "chose not to offer commitments," but the Commission said it was still in discussions with the publisher.

The European Commission said in a statement that the companies "may have contrived to limit retail price competition for e-books in the European Economic Area (EEA), in breach of EU antitrust rules." In order to address these concerns, the e-book publishers have offered to "terminate on-going agency agreements and to exclude certain clauses in their agency agreements during the next five years."

It's taken a year for European antitrust authorities to reach this point after U.K. trading authorities first raided offices and began investigating on behalf of the EU. Once the EU was involved, allegations were made that Apple and its partner publishers had conspired to restrict competition by fixing the prices of e-books.

The Commission had opened the antitrust case to investigate whether the publishers were "helped" by Apple to fix e-book pricing. It is also alleged that the actions could have blocked rivals, such as Amazon, which has a different "wholesale" pricing model, and ultimately hurt consumers.

Amazon's pricing model gives much greater flexibility to e-book makers and sellers, allowing them to price what they like for their work, and even at a loss, while Apple takes an 'agency' fee of 30 percent of each e-book sale.

The publishers also agreed to end a "most-favored-nation" clause, which allows a retailer to apply a lower retail price for an e-book by another retailer, regardless of the model used by other retailers. This meant that retailers could take a slice of the profits, which could have a knock-on effect to smaller booksellers.

The Commission said in the statement that it was concerned that the switch to these agency contracts "may have been coordinated between the publishers and Apple, as part of a common strategy aimed at raising retail prices for e-books or preventing the introduction of lower retail prices for e-books on a global scale."

The agency said it was "satisfied" that these commitments will "remedy the identified competition" that Europe's executive body identified.

EU antitrust chief Joaquin Almunia said: "While each separate publisher and each retailer of e-books are free to choose the type of business relationship they prefer, any form of collusion to restrict or eliminate competition is simply unacceptable."

He added: "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 e-books."

This story originally appeared at ZDNet's Between the Lines under the headline "EU ends e-book pricing antitrust probe after Apple, publishers settle."

 

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