Apple off the hook in EC's ebook investigation

The European Commission has dropped its case against Apple and four major publishers over ebook price fixing.

Apple has now agreed to commitments with the European authority, alongside the four publishing companies, Simon & Schuster, Harper Collins, Hachette Livre and Verlagsgruppe Georg von Holtzbrinck.  This will mean that agreements to keep prices fixed at higher rate be terminated, with a commitment to allowing retailers to set their own prices for at least the next two years.

Freedom to sell at lower prices will benefit retailers such as Amazon which offer e-books at less cost than those advertised by Apple.

Previously, Apple and the publishers agreed to move away from a wholesale model of sales, which allowed ebook retailers to set their own prices and use discounts, to an agency model, which meant that prices could not be set lower than on the Apple Store.  

This practice was deemed uncompetitive by the EC, which launched an investigation, linking with a similar case put in place by the US Department of Justice.

“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,” EC vice president Joaquín Almunia said. “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”.

Apple and the publishers have now agreed to terminate ongoing agency agreements, the EC stated, and to exclude certain clauses from agreements made over the next five years.

Proceedings opened in December 2011, with a fifth publisher, Pearson, also implicated.  The EC is involved in ongoing discussions with the owner of publishing house Penguin to reach make similar commitments.

The EC said that the companies would not receive financial penalties as a result of the anticompetitive pricing practices, in order to bring about a speedy resolution for the fast moving market. A potential fine had been discussed, with Apple potentially being told to hand over 10 percent of its global earnings, which could have amounted to $15 billion.

One author told TechEye that the EC’s decision, resulting in temporary commitments, failed to address underlying concerns in the publishing industry.

“The deal is short term and in a few years Apple and its cronies could go back to the current situation,” we were told.   “At the same time there is no checking of the power of Amazon on the market. 

“In short, the EU might have delayed the problems that are already existing in the ebook market, but they have not resolved them.”