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EC investigates if publishers, Apple collude on ebook prices

updated 07:30 am EST, Tue December 6, 2011

EC worries iBookstore may have made illegal deals

The European Commission detailed plans Tuesday for a formal investigation into major publishers and Apple as to whether their deal might violate EU antitrust law. Officials will determine whether Hachette Livre, HarperCollins, Penguin, Simon & Schuster, and Macmillan have possibly used Apple to shut out e-book competition from rival stores or publishers. EC staff are worried that the agency model, where the store makes a flat rate and the publishers set the prices, is keeping the price of titles on the iBookstore and elsewhere artificially high.

"The Commission has concerns that these practices may breach EU antitrust rules that prohibit cartels and restrictive business practices," it said.

Officials had already raided publishers' offices in March. The UK's Office of Fair Trading has also been investigating publishers in Britain in what's now known to be "close cooperation" with the EC.

Apple's suspected involvement wasn't detailed, but may have much to do with a war with Amazon to court publishers. Until the iBookstore, Amazon had adopted the wholesale model for the Kindle, where publishers got a fixed amount for e-books and Amazon could charge what it wanted. While it led to lower prices, publishers were known to be unhappy since Amazon was often price dumping, selling at or even below cost to build market share.

In using the agency model, Apple gave publishers the higher prices that they had wanted. By asking for a "most favored nation" condition where prices couldn't be lower at any other store, though, it pushed Amazon into using the agency model itself to keep publishers, increasing the price of books in its own store.

Neither Apple nor the publishers have responded to the investigation so far.



By Electronista Staff
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Comments

  1. Peter Bonte

    Fresh-Faced Recruit

    Joined: Aug 2001

    0

    Netherlands

    In Dutchland there is a fixed book price for the first 6 months the book is for sale, how does this fit in with the artificially high prices? Almost every bookstore in the world works with a fixed percentage on the publisher's price, i don't know how all this is different.

  1. Bobfozz

    Fresh-Faced Recruit

    Joined: Jul 2008

    -1

    Job Security

    These EC "people" are folks no one would want to hire in their publishing business. They have NO brain or wallet for commerce, always trying to protect the consumer from, who? If I think something is too expensive, I simply do not buy it. If it doesn't matter I do. That's real choice. Maybe there is or was a trade war between Apple and Amazon, isn't that their problem. More good would come of THEIR working something out than the interference of the usual BUSYBODIES.

    What do they say when they go home from a "hard" day's work. Son: Hi Dad/Mom, what did you do today? Parent: "The usual, behaved like an idiot, used a club on outsiders. Told people how the fair market works and how to run their business."

  1. dliup

    Fresh-Faced Recruit

    Joined: Jan 2006

    +1

    book retailers

    I bet it's book retailers that started the probe. Previously, they set the price. Now, publishers set the retail price. It ACTUALLY means they can discount physical books lower than e-books.

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