The European Commission has opened a formal antitrust investigation into five e-book publishers and Apple, a possible accomplice through its iBookstore store, into allegations of collusion and stifling competition. The publishers in question are Lagardere's Hachette Livre, News Corp.'s (NAS: NWSA) Harper Collins, CBS's (NYS: CBS) Simon & Schuster, Pearson's (NYS: PSO) Penguin Group, and Verlagsgruppe Georg von Holtzbrinck's Macmillan division.
The commission alleges that the publishers may have "engaged in anti-competitive practices affecting the sale of e-books in the European Economic Area," in violation of antitrust regulations. The entity will look into the group's agency agreements and see whether the publishers' and retailer's practices breach rules against cartels and restrictive business practices.
The investigation was due in part to a PricewaterhouseCoopers report that European e-book sales have been slow because of fixed price agreements and a limited selection of non-English titles. Bloombergalso mentioned that previous complaints from Amazon.com (NAS: AMZN) may have contributed to heightened regulator scrutiny.
Interestingly, Apple's insistence on using the agency model in its iBookstore -- taking a 30% cut while giving publishers pricing freedom -- effectively forced Amazon to similarly adopt agency agreements with publishers. Before that, Amazon retained pricing control and was able to offer e-books at extremely low prices.
The EC says it won't prejudge the outcome of the investigation, but either way, Apple is no stranger to scrutiny over its iBooksstore. The Mac maker faced a similar probe stateside in Connecticut last year, along with Amazon, over its e-book pricing. Apple and the same five publishers are even the target of a class action lawsuit over how the agency model has pushed e-book prices higher.
Apple's disruptive ways forced Amazon's hand in changing its Kindle book pricing. While readers may not appreciate the notched-up prices, Apple and its shareholders will sure enjoy their share.
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