Apple, publishers propose settlement in Europe e-book antitrust case

The European Commission has put measures proposed by Apple and four publishers to alleviate concerns over anti-competitive behaviour in the e-book market up for public discussion.

Apple and four publishing companies have offered to settle with the European Commission over antitrust allegations relating to the e-book market.


Apple, Hachette, HarperCollins, Holtzbrinck and Simon & Schuster have all proposed measures to "alleviate concerns that these companies may have engaged in an anti-competitive concerted practice affecting the sale of e-books", the Commission said.

The EC began its investigation into a number of publishers late last year over fears they had created a cartel and engaged in restrictive business practices after moving e-books sales from a wholesale model to using agency contracts, which give more power to the publisher to set e-book pricing.

Under the agency model, publishers would set the price of a book and Apple would take a cut of it. With the wholesale model, an e-book vendor would pay a set amount for an e-book and then set the retail price itself. According to Reuters, the publishers had all agreed agency contracts that specified that other book sellers, including Amazon, could not sell their books at a lower price than Apple's iTunes.

"The Commission has concerns that this switch may have been the result of collusion between competing publishers, with the help of Apple, and may have aimed at raising retail prices of e-books in the EEA [European Economic Area] or preventing the emergence of lower prices," the Commission said.


The publishers have all proposed to drop the agency contracts for a period of five years, as well as ditching the 'most favoured nation' (MFN) clause, which sets maximum retail price and commission levels, from their contracts.

"The same key terms, including in particular the MFN clause, in the agency agreements with Apple meant that, to avoid lower revenues and margins for their e-books on the iBookstore, the publishers had to pressure other major e-book retailers offering e-books to consumers in the EEA to adopt the agency model," the EC added (PDF).

Should any of the four publishers start new agency agreements with retailers, the booksellers will be able to set the retail price of e-books over a two-year period, as long as the total discount they agree to on the book doesn't end up being greater than the commission they receive from the publisher.

The Commission has now asked for interested parties to offer their opinion on the proposed measures. If they are deemed satisfactory, they will become part of a legally binding commitment, albeit one that doesn't indicate that any of the companies broke antitrust law.

Should the companies break the legal commitment, the Commission will be able to fine them 10 percent of their annual turnover.