The European Commission has adopted a decision that renders legally binding the commitments offered by British media group Pearson's Penguin unit, in the
context of the Commission's investigation regarding the sale of e-books in the
European Economic Area (EEA).
The Commission had concerns that Penguin, together with four other publishers -
Simon & Schuster (CBS Corp., USA), HarperCollins (News Corp., USA), Hachette
Livre (Lagardre Publishing, France), Verlagsgruppe Georg von Holtzbrinck
(Germany; owner of inter alia Macmillan) - and Apple may have contrived to limit
retail price competition for e-books in the EEA, in breach of EU antitrust
rules.
To address these concerns, Penguin offered the same commitments as those
proposed by the other four publishers and made legally binding on those
companies in December 2012. They include, in particular, the termination of on-
going agency agreements and the exclusion of certain most-favoured-nation (MFN)
clauses in Penguin's agency agreements during the next five years. Penguin also
offered to give retailers freedom to discount e-books, subject to certain
conditions, during two years.
The European regulators have concluded that, taken together, the commitments
offered by Penguin, complementing those made binding by the Commission on the
other four publishers and Apple, "will contribute to creating a favourable
environment for a reset of the competitive conditions in the e-books market
during a sufficient period of time." First, Penguin will terminate its relevant
agency agreements with retailers (in addition to the agency agreements with
Apple which have to be terminated under the commitments made binding on Apple in
December 2012). Second, the two year "cooling-off" period during which retailers
will be able to discount e-books will now also apply to all Penguin e-book
titles. Third, the price MFN ban will apply to agreements renegotiated between
Penguin and any other retailer (not only to agreements renegotiated between
Penguin and Apple).