EU ends e-book pricing antitrust probe after Apple, publishers settle

EU ends e-book pricing antitrust probe after Apple, publishers settle

Summary: EU antitrust regulators have accepted an offer by Apple and four other e-book publishers to settle the case into alleged e-book price fixing.

TOPICS: EU, Amazon, Apple

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.

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Europe begins antitrust case against Apple, e-book publishers

Europe begins antitrust case against Apple, e-book publishers

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

The iPhone and iPad maker, along with HarperCollins, Hachette Livre, Verlagsgruppe Georg von Holtzbrinck-owned Macmillan, and CBS-owned Simon & Schuster (ZDNet is 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 said it will open an 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 Commission 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."

Topics: EU, Amazon, Apple

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  • There is mistake Amazon for Apple in this paragraph

    "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 Amazon takes an 'agency' fee of 30 percent of each e-book sale."

    It is actually Apple's model, not Amazon's. Please replace Amazon with Apple in this paragraph.

    Amazon's model was that they set the prices and that is it.
    Publishers could not offer books to readers for cheaper or higher prices than whatever Amazon wanted for them.

    So while EU/USA antitrust authorities have worries against agency scheme, they only asked for a pause before those new rules that publishers and Apple want will start working full force. With the settlement, that pause will last 3-5 years.

    Antitrust authorities could not ask for more since Amazon's scheme does not really allow publisher selling cheaper books at the time they want, not only more pricey ones. And it also a dumping against any competing book selling system, which limits competition and works against end-users.

    Hence the pause and no fines against publishers and Apple.
    • Almost....

      The Amazon model was the publisher would say I want to receive $x.xx for each copy of this book and Amazon would then sell it for whatever price they chose to sell it for. In other words, the exact same model as retail stores have used for many years.

      Sometimes Amazon would sell at a profit and others at a loss, but it was all carefully calculated to benefit Amazon.

      Then Apple came along and said, you set the price the book is sold at, we will take 30%, but the catch is you cannot allow anyone else to sell for a lower price than your book sells for on our store.

      The problem is that last bit is illegal price fixing.
      • Where is "fixing" part?

        The only part who wanted to fix prices was Amazon.

        Apple and publishers wanted to have free unfixed prices -- both lower and higher than what Amazon's monopoly dictates.

        And this wish of theirs is perfectly legal, hence their approach is not forbidden in any way, it is just postponed for few years to provide "accommodating", "adjusting" period. No fines, nothing illegal, for competition, against dictate of Amazon.
        • You sir are an Apple fanatic!

          Why is it so hard to see the truth?
          Why is it that most of these retailers all sell e-books for the same or more than paperbacks?
          It appears that ever one except Apple fanboi's see that Apple and others were trying to fix e-book prices for more profit and basically to screw the consumer.
          Then I suppose we shouldn't be surprised when Apple fanbois are so willing to pay more than they have to. So quick to dump on MS for so called anti competitive behavior and equally quick to defend Apple for being anti competitive. (shakes head)
          • Again this "fixing" nonsense. You are Amazon fanatic, sir!

            The subject.
  • Books

    I still cannot understand why a lot of Ebooks are more expensive than the hardbacks.
    • Simple really!

      People are paying for them with out questioning it. If people who bought E-readers questioned it and got together to demand fairer prices then and only then would something be done.
      I know first hand for 2 reason, one I read all the time SciFi mainly and with bad eyes I looked in to e-readers quite a few years ago. Saw the prices of e-books and then found bookdepository. Most of the time I can buy books in paperback form and get it delivered free to Australia and the same or less price then the equivalent e-book. Thats just stupid, I do read some eBooks on my 11.6" tablet but they are all free, won't buy any unless the eBook industry get there act together.