updated 01:38 am EDT, Wed October 10, 2012
One of five publishers not participating in settlement
The head of the European Commission believes that a settlement could be reached in the Apple e-book antitrust case "in the coming couple of months." The European Commission is now market-testing an offer by Apple and four publishers in a bid to end the probe. The publishers involved mirror those from the US case over the same e-book price-fixing allegations -- Simon & Schuster, HarperCollins, Hachette Livra, and Macmillan are all named in the settlement offer. Publisher Penguin was also charged in the investigation, but is not participating in the settlement.
"For a period of two years, the four publishers will not restrict, limit or impede e-book retailers' ability to set, alter or reduce retail prices for e-books and/or to offer discounts or promotions," the European Commission said in its Official Journal, detailing the offer under consideration.
A migration away from an agency model, meaning multiple companies (the book publishers) acting through one company (Apple), is the core of the case. This standard model lets the publishers set book prices as a vehicle to avoid price wars. The defendants say their actions were in defense against Amazon's near monopoly of the market.
Prior to 2010, Amazon possessed 90 percent of the e-book market using a "wholesale" model, which allowed it to sell e-books at a loss in order to drive independents out of business, stave off big competitors, and hurt brick-and-mortar bookstores. Following the entry of Apple with its agency model (and subsequent entrants like Barnes & Noble), Amazon's e-book market share is now estimated at 60 percent. Apple and the publishers tried to get the complaint tossed out, but both the US judge and the EU believes that Apple circumvented the openness of the e-book market by assisting the publishers to establish prices together, rather than competing independently.