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Apple, E-Book Publishers Probed by European Union Regulators

Apple, E-Book Publishers Probed by European Union Regulators
The probe will examine deals between Apple and Lagardere’s Hachette Livre, News Corp.’s Harper Collins, CBS’s Simon & Schuster, Pearson’s Penguin and Verlagsgruppe Georg von Holtzbrinck GmbH. Photographer: Jin Lee/Bloomberg

Apple Inc., the world’s biggest technology company, and five e-book publishers are being investigated by European Union antitrust regulators over deals that may restrict sales across the region.

The probe targets the iPad-maker’s deals with Lagardere SCA’s Hachette Livre, News Corp.’s Harper Collins, CBS Corp.’s Simon & Schuster, Pearson Plc’s Penguin and Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan division, the European Commission said in an e-mailed statement. Publishers’ deals with retailers are also under scrutiny.

PricewaterhouseCoopers said in a January report that European e-book sales have been sluggish, partly due to the small range of non-English titles and fixed price agreements between publishers and stores in 13 countries. EU Competition Commissioner Joaquin Almunia said last month that he wanted to fight “artificial restrictions imposed by some companies to cross-border trade” and was examining the way e-books are distributed.

Today’s probe “will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition,” the Brussels-based authority said.

Amazon Sales Inc., the world’s largest Internet retailer, may sell as many as 5 million e-book readers in the fourth quarter, according to a report from Forrester Research Inc. Amazon sold about half of the 12.8 million e-book readers purchased worldwide last year, IDC said in March. E-books are also sold for media tablets such as the iPad and Samsung Electronics Co.’s Galaxy.

Piracy, price and a lack of content for non-English-speaking countries have stifled the spread of e-books in Europe, according to Mario Lombardo, a senior research analyst at IDC. In part because of the value added tax, many e-books cost the same or more than hard-copy editions, he said.

“Local publishers are however now gearing up to offer digital books, and all new editions are offered in both formats,” Lombardo said in an e-mail. There’s “still a long way to go,” he said.

Apple fell 0.3 percent to $391.69 at 10:57 a.m. in New York trading. Amazon declined 1 percent to $194.35.

ITunes Settlement

The probe isn’t Apple’s first encounter with the EU’s antitrust authority. The company settled an EU antitrust case in 2009 by agreeing to reduce prices for U.K. iTunes music downloads and was probed over restrictions on iPhone applications in a case the EU closed last year.

Some European newspapers also protested earlier this year against Apple’s proposed subscription model for the iPad. Apple and Samsung were recently quizzed by the commission over the use of smartphone patents, regulators said last month.

Apple, based in Cupertino, California, Paris-based Lagardere and Macmillan declined to comment about today’s EU announcement.

French technology news website reported in March that Editions Albin Michel SA president Francis Esmenard said raids by regulators on his company and others were triggered by a complaint from Amazon.

Amazon didn’t immediately respond to a call and an e-mail seeking comment.

Fair Trading

Britain’s Office of Fair Trading, which opened an investigation in February, said in a statement on its website today that it would drop its probe into e-books to allow EU officials to take the lead.

“Pearson does not believe it has breached any laws, and will continue to fully and openly cooperate with the commission,” the company said in an e-mailed statement.

Harper Collins is “cooperating fully with the investigation,” according to an e-mailed statement from spokeswoman Siobhan Kenny. Simon and Schuster is also cooperating with the probe, spokesman Adam Rothberg said in an e-mail.

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