Europe begins antitrust case against Apple, e-book publishers

Europe begins antitrust case against Apple, e-book publishers

Summary: European antitrust authorities are to investigate the 'cartel' practices of e-book publishers, and Apple, in the region.

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European antitrust authorities will investigate Apple, along with five major publishers, over alleged anti-competitive practices in the e-book marketplace, the European Commission announced this morning.

The five publishers, including News Corp.-owned HarperCollins, CBS-owned Simon & Schuster (ZDNet and Simon & Schusterare both owned by CBS), and UK-based Penguin Books, will be investigated as a "matter of priority", according to the Commission.

(Source: Flickr, CC)

The Commission is investigating whether the publishers were "helped" by Apple, which offers iBooks as part of its offering for its iOS devices -- including the iPod touch, the iPad, and iPhones.

Europe's executive body will investigate specifically -- careful to separate the publishers and the Cupertino-based technology giant as a possible conduit to illegal activity -- any illegal activity that may lead to or include "restricting competition in the EU or the EEA (European Economic Area)".

The Commission likened the practices of the current e-book market to 'cartels'.

In March, the Commission carried out "unannounced inspections" of several companies' premises involved in the e-book publishing sector, indicating that an antitrust investigation was on the way.

European and member state counterparts did not announce at the time which companies were raided, until today.

The initial raids came only a month after the UK's Office of Fair Trading (OFT), the UK consumer and competition regulator, began its own investigation into e-book publishing.

Citing the "arrangements between certain publishers and retailers for the sale of e-books" as the center of its inquiries, the regulator sought answers to determine whether UK law could be broken, or whether the conduct of such business practices could be having a harmful effect on UK competition rules.

The Commission today acknowledged the parallel investigation between its own regulatory authorities and the UK's OFT.

The OFT had to close its investigation before it handed its findings to the Commission, as part of a wider investigation, on "grounds of administrative priority".

If companies are found to break European antitrust laws, they could be fined up to 10 percent of their global turnover.

Google chairman Eric Schmidt is currently at European powerhouse in Brussels in efforts to smooth over relations, after the European Commission began its own antitrust investigation into the company.

Schmidt is expected to speak to European regulators after the Commission accused of 'cooking' up search results, as well as to smooth over any bumps in the road ahead of Google's upcoming Motorola Mobility acquisition.

While Google had its fair share of book-related controversies, it is not thought that the search giant is implicated in this current antitrust investigation.

A Pearson spokesperson said that it "does not believe it has breached any laws, and will continue to fully and openly cooperate with the Commission", speaking to Reuters.

Apple declined to comment.

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Topics: Apple, Enterprise Software, Hardware, Mobility, Security

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13 comments
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  • This will be interesting

    Ever since collaberation between Apple and the major publishing houses changed the ebook selling model, I can now frequently get paper books cheaper than ebooks.<br><br>I have yet to see a clear concise believable answer as to why.<br><br>Have popcorn - will stay tuned.....
    rhonin
  • Here is what would be good for competition

    Apple should be broken up into the following companies:
    - an online music selling company
    - an online book selling company
    - an online video selling company
    - an online app selling company
    - a tablet company
    - a phone company
    - an MP3 company
    - a voice recognition company
    - an advertising company
    - a browser company
    - an OS company
    - an office suite company
    - a desktop company
    - a laptop company
    - a computer peripheral company

    That would benefit competition and benefit consumers.
    toddybottom
    • You're clearly an intellectual giant

      Sorry, just kidding. You sound very bitter. Did someone molest your pet rabbit?
      ego.sum.stig
      • RE: Europe begins antitrust case against Apple, e-book publishers

        @ego.sum.stig@...

        I think its called satire.
        maneesh77
    • RE: Europe begins antitrust case against Apple, e-book publishers

      @toddybottom Sounds like what someone wanted Justice to do to Microsoft a few years back.
      l_creech
  • RE: Europe begins antitrust case against Apple, e-book publishers

    This is not actually about Apple, it is about the agency model for selling e-books. Apple just happened to be the one that gave the publishing agencies the route to institute that policy change. Apple did it because they don't like to compete on a pricing model, they want to compete on the overall experience. They recognized that Amazon would kick their ass if price was a factor so they negotiated with the publishing houses to take price out of the equation. Apple doesn't care about e-book competition ... they just wanted to change the playing field so they could make a go of it.

    The flip side of all this is ... the publishing houses now have total control over e-book prices. Nobody can sell anything of theirs unless it sells at the price they want. Everyone else has MSRP ... they have MCRP (Manufacturer Controlled Retail Price, the agency model). If you want to sell it ... you have to sell it at their price because you are only their agent. You don't have any control over the products you are selling. What would be the point of having multiple electronic stores, after all, if they couldn't vary their price on products? The competition between electronics stores would be all but dead. Sales promotions? Nope. Holiday deals? Nope. All killed off if everyone followed the agency model. You could never get a "deal" .... they wouldn't exist. Only what the manufacturer wanted to charge would be the price available in all stores.

    At its heart, the agency model is an anti-competitive policy. It shouldn't exist.
    Ididar
    • Interesting you would write this

      @Ididar <br>"The competition between electronics stores would be all but dead. Sales promotions? Nope. Holiday deals? Nope. All killed off if everyone followed the agency model."<br><br>How fascinating that you believe this to be anti-competitive because this is exactly what Apple does. When Best Buy wants to sell Apple products, they have to charge the MCRP that Apple dictates. Sales promotions? Nope. Holiday deals? Nope.<br><br>So you admit Apple is anti-competitive.
      toddybottom
      • RE: Europe begins antitrust case against Apple, e-book publishers

        @toddybottom
        How does Best Buy inability to reduce prices on Apple products hurt competitors' ability to compete. Arguably higher Apple prices = easier to compete for competing products, no?
        anono
      • anono: You should be asking Ididar that question

        He is the one who stated:
        "What would be the point of having multiple electronic stores, after all, if they couldn't vary their price on products? The competition between electronics stores would be all but dead. Sales promotions? Nope. Holiday deals? Nope. All killed off if everyone followed the agency model. You could never get a "deal" .... they wouldn't exist. Only what the manufacturer wanted to charge would be the price available in all stores."

        I was simply pointing out the hypocrisy in his statement.

        So ask him your question and see what kind of answer you get.
        toddybottom
      • RE: Europe begins antitrust case against Apple, e-book publishers

        @toddybottom There are more than a few consumer electronics manufactures that dictate what the sale price of their products are to their retailers.
        non-biased
      • RE: Europe begins antitrust case against Apple, e-book publishers

        @toddybottom you are preaching the truth of the Anticompetitive practices Apple has been instilling specifically with the all encompassing defacto monopoly they have on all portable media players and sales.

        The worst thing they do is that all peripheral speakers are now only ported to the Apple dock as opposed to being universal for all digital media players.
        kardinian@...
  • RE: Europe begins antitrust case against Apple, e-book publishers

    Well at least we know how Europe is going to fix it's economic problems, they will continue to file antitrust actions against American Tech Giants.
    bonnie@...
    • RE: Europe begins antitrust case against Apple, e-book publishers

      @bonnie@... That was the first thing that came to mind as I was reading the article. Is it me or are we seeing more and more of these cases since Europe started to spiral down the financial drain?
      non-biased