Apple and Publishers Offer Antitrust Concessions

Apple and four major book publishers have agreed to allow online retailers, such as Amazon to see electronic books at a discount rate in an attempt to end an EU antitrust suit. They have modified their e-book distribution agreement to permit a 2 years extension for retailers. The concession made by Apple and publishers are just meant to prevent an EU antitrust investigation similar to the one that Apple and other 2 publishers are currently facing in US court.

EU antitrust issued an investigation into Apple’s pricing deals on e-books with the publishers last year, claiming that it would hinder competition in European unit. The four major publishers are News Corp unit HarperCollins, Verlagsgruppe Georg von Holtzbrinck, Hachette Livre Lagardere SCA, and Simon & Schuster.

The publishers agreed to a deal in which online versions of their books sell for settle charges on Apple iTunes with the prime brand taking 30% of the profit. The agreement specified that other online retailers are not supposed to sell their products at a lower cost.

The Commission said that many companies had offered compromises in a bid to end the case and avoid penalties that could reach at least 10% of their global proceeds, but it didn’t give details. Penguin group was also included in the investigation, but not pointed out among those suggesting proposals.

The commission didn’t have too many opinions from other businesses as whether or not the concessions are sufficient to drop the case. It is also said that the commission is market testing the pledges on an informal basis. Verlagsgruppe Georg, Amazon, and Apple declined to comment.

The new proposals are quiet similar to the ones that were announced in April of a settling charges lawsuit brought by US government against Hachette, Simon & Schuster, and HarperCollins that also had some tie ups with Apple. The publishers caused controversy back in 2010 when they announced that they would work on a completely different model than Amazon’s wholesale model. Apple convinced publishers to take up an ‘agency model’ under which they have to set different price range on their e-books and 30% of proceeds would go to Apple. This new rule toppled retailer’s model that allowed them to fix any charges what they like. Under this model, Amazon set a charge of $9.99 for its electronics books in order to rule the market.   

The concessions are still under review by EU Attribute Commission; if it gets rejected, Apple and publishers might have to pay fine up to 10% of company’s global annual revenue.