Apple and major publishers have offered to let retailers such as Amazon.Com Inc sell e-books at a discount, in a bid to end an EU antitrust investigation, the European Commission said on Wednesday.
EU antitrust regulators in December 2011 started investigations on Apple's e-book pricing deals with Simon & Schuster, News Corp unit HarperCollins, French group Lagardere SCA's Hachette Livre, Verlagsgruppe Georg von Holtzbrinck and Penguin Group. Following discussions with the regulators, four of these publishers and Apple offered commitments with a view to seeking an early resolution of the case. EU said that Penguin (Pearson group, United Kingdom) has not offered any commitments.
The proposed commitments aim to alleviate concerns that these companies may have engaged in an anti-competitive concerted practice affecting the sale of e-books in the European Economic Area (EEA).
The European Commission is now inviting comments from interested parties on commitments offered the four international publishers. If the market test confirms that the commitments are suitable to address the Commission's competition concerns, the Commission may make them legally binding on the companies.
The Commission considers at this stage that these companies may have breached EU antitrust rules that prohibit cartels and restrictive practices by jointly switching the sale of e-books from a wholesale model to agency contracts containing the same key terms (in particular an unusual so-called "Most Favoured Nation" (MFN) clause for retail prices). The agency model allows more control by publishers over retail prices. The Commission has concerns that this switch may have been the result of collusion between competing publishers, with the help of Apple, and may have aimed at raising retail prices of e-books in the EEA or preventing the emergence of lower prices.
In the proposed commitments, the five companies offer to terminate existing agency agreements and refrain from adopting price MFN clauses for five years. In case any of the four publishers would enter into new agency agreements, retailers would be free to set the retail price of e-books during a two-year period, provided the aggregate value of price discounts granted by retailers does not exceed the total annual amount of the commissions that the retailer receives from the publisher.
HarperCollins, Simon & Schuster and Hachette reached a settlement with the U.S. government in April with similar proposals.