EU, publishers near deal in e-book pricing probe

Brussels: European regulators said on Wednesday they were near a deal with giant publishers accused of e-book price fixing, weeks after media giants including Apple sealed a deal in the United States.

The European Commission said it was “inviting comments from interested parties” on commitments proposed by Simon & Schuster Inc., HarperCollins, Hachette Book Group, and the owners of Macmillan and Apple.

The aim was to “alleviate concerns that these companies may have engaged in an anti-competitive concerted practice affecting the sale of e-books.”

US prosecutors announced on August 30 that the top three US publishing houses had inked a $69 million deal to close the book on charges that they had schemed to fix prices of digital titles.

In the US case, readers will get compensation if they bought at prices found to be unduly high owing to collusion between publishers and iPad developer Apple.

The US lawsuit alleged that the publishers had conspired with Apple to end the longstanding “wholesale model” in which e-books were sold to retailers which had the power to set their own prices.

They replaced this with a so-called “agency model” whereby publishers would set prices charged by retailers for the e-books. Under the arrangement, Apple was guaranteed a 30-percent commission on each e-book sold.

“The agency model allows more control by publishers over retail prices,” the EU regulators said.

Before the introduction of Apple’s iPad, online retail giant Amazon sold electronic versions of many new bestsellers for $9.99.

After the agency model was adopted, prices rose to $12.99 and higher, the case suit said, and price competition among retailers was “unlawfully eliminated.”

In the United States, the defendants agreed to compensate e-book buyers to resolve antitrust claims.

Now in Europe, the five companies have offered to terminate the sale of e-books through these “agency contracts” and refrain from adopting disputed price clauses for five years.

In line with the US lawsuit, the Commission had concerns that the switch to this model, as opposed to a traditional wholesale approach, “may have breached EU antitrust rules that prohibit cartels and restrictive practices.”

It may further “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 Europe) or preventing the emergence of lower prices,” a statement said.

US prosecutors cited evidence showing that publishers prevented retail price competition, resulting in buyers paying tens of millions of dollars more for e-books.

Brussels added: “If the market test confirms that the commitments are suitable to address the Commission’s competition concerns, the Commission may make them legally binding on the companies.”

Interested parties have one month to make submissions.

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