Apple, Publishers Settle EU E-Books Price-Fixing Probe
Apple Inc. (AAPL), the world’s biggest technology company, and four publishers ended a European Union antitrust investigation after regulators accepted their settlement offer to overhaul pricing for digital books.
Apple and the publishers will drop pricing agreements they struck in 2010 that targeted Amazon.com Inc. (AMZN)’s low e-book prices, EU Competition Commissioner Joaquin Almunia told reporters at a press conference in Brussels today. The deals required the publishers to offer to Apple any price cuts they gave to other retailers. Amazon and other retailers were told they might not be supplied with e-books if they didn’t agree to the new terms.
Such agreements “effectively made it very costly for publishers to allow other retailers to sell at lower prices than Apple since that low price would then have to be extended to Apple’s e-Books Store,” Almunia said. The commissioner said he preferred a settlement to fines and a lengthy antitrust probe because e-books were “a nascent and fast-moving market.”
Apple, CBS Corp. (CBS)’s Simon & Schuster, News Corp. (NWSA)’s HarperCollins, Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan unit and Lagardere SCA (MMB)’s Hachette Livre will avoid any agreement limiting retailers’ pricing for five years and the publishers will also allow retailers to discount e-books for two years, the European Commission said in an e-mailed statement on the settlement. The iPad maker previously took a fixed 30 percent of e-book prices set by the publishers.
Pearson Plc (PSON)’s Penguin unit is now also “in constructive discussions” with the EU on a possible offer to end the probe, the EU said. While Pearson was targeted by the EU when it opened the e-books investigation in 2011, it didn’t join the other publishers in proposing a settlement in April.
Pearson agreed in October to combine Penguin with Bertelsmann SE’s Random House to create the largest book publisher in the U.K. and the U.S. They plan to close the deal in the second half of 2013 after they receive regulatory approval.
Penguin’s position “has been -- and remains -- that we have done nothing wrong,” the company said in a statement. “As a practical matter, we are settling in the interests of clearing the decks before the new company is established.”
Holtzbrinck Group believes “it is in the best interests of our European business to have agreed on these settlement terms and we are pleased now to be able to move forward with developing our e-book business,” Joyce Lorigan, a spokeswoman for the company’s Macmillan unit said in an e-mail.
“Hachette U.K. is engaged in productive discussions with the e-book agents to ensure that our agreements conform to the terms of the settlement,” the company said in a statement. “In France there is a retail price-setting law.”
Apple and Simon & Schuster declined to comment on the EU announcement. HarperCollins declined to immediately comment. Amazon didn’t respond to an e-mail and a voice message seeking comment.
An antitrust settlement allows regulators to end the investigation without imposing fines or determining that the companies violated competition rules. Companies face fines as high as 10 percent of annual sales if they break the terms of the settlement.
The U.S. Department of Justice sued Apple, Macmillan and Pearson’s Penguin in New York earlier this year, claiming the publishers colluded to fix e-book prices. Simon & Schuster, Hachette and HarperCollins reached settlements with the DOJ.
PricewaterhouseCoopers said last year that European e-book sales have been sluggish, partly because of the small range of non-English titles and fixed price agreements between publishers and stores in 13 countries. Almunia has said he wants to fight “artificial restrictions imposed by some companies to cross-border trade.”
Apple previously 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.
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