NEWS: E.U. Investigating Possible Cartel in E-Book Market

The European antitrust authority said Tuesday that it was investigating possible collusion between Apple and five major publishing houses in the growing market for electronic books.

The European Commission said that Apple may have helped imprints like Penguin, owned by Pearson of Britain, and Harper Collins, owned by News Corp. of the United States, to engage in “anti-competitive practices affecting the sale of e-books.”

In particular, the commission said it was “examining the character and terms of the agency agreements entered into” by the publishers and retailers of e-books, like Apple.

The three other imprints named by the commission were Hachette Livre, owned by Lagardère of France, Simon & Schuster, a division of CBS of the United States, and Verlagsgruppe Georg von Holzbrinck of Germany.

Apple declined to comment.

In a statement, Pearson said it did “not believe it has breached any laws, and will continue to fully and openly cooperate with the commission.” HarperCollins said that it was “cooperating fully with the investigation.”

Lagardère, based in Paris, declined to comment on the announcement, according to Bloomberg News.

CBS and its Simon & Schuster unit and Harper Collins did not immediately respond to calls and e-mails seeking comment, while Holtzbrinck did not immediately respond to an e-mail query, according to Bloomberg.

Similar concerns in the United States have already led to litigation.

In August, Hagens Berman, a law firm, filed a class action lawsuit in the U.S. District Court for the Northern District of California contending that the publishers and Apple increased prices for popular e-book titles to improve profits and force e-book rival Amazon to abandon “pro-consumer discount pricing.”

According to Hagens Berman, the “publishers believed that Amazon’s wildly popular Kindle e-reader device and the company’s discounted pricing for e-books would increase the adoption of e-books, and feared Amazon’s discounted pricing structure would permanently set consumer expectations for lower prices.”

Until recently, a variety of retailers including major bookshop chains had the power to set the price of books.

But that system began to change when the publishers, possibly with the help of Apple, which markets its popular iPad that also serves as an e-book reader, took greater control over the power to set prices, according to European officials.

Those changes may have kept the prices of e-books higher than they might otherwise have been in a fully competitive market, the officials said.

The decision to open the case followed surprise inspections at the offices of companies in the sector in March, and the commission said it would treat the case “as a matter of priority.”

The decision also follows “a significant number of complaints” to the Office of Fair Trading in Britain.

The British O.F.T. closed a similar investigation on Tuesday, saying in a statement that, “the European Commission is currently well placed to arrive at a comprehensive resolution of this matter.”

European officials are now expected to investigate further to determine whether Apple and the publishers deliberately set out to influence prices, and whether consumers have been paying too much for e-books.

The European Commission can fine companies found to have breached the bloc’s competition rules up to 10 percent of their global annual sales, and it can require them to change their business practices, if they find wrongdoing.

 Compliments of the fine folks at The New York Times


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