Publishers settle dispute to let retailers sell discount e-books

Apple and four major publishers have offered to let retailers such as Amazon sell e-books at a discount to settle an EU competition investigation into their pricing deals and avoid possible fines.

The case highlights the battle between retailers and publishers over pricing control as publishers look to e-books to boost revenues, cut costs and reach bigger audiences.

The European Commission has been investigating Apple’s e-book pricing deals with Simon & Schuster, News Corp unit HarperCollins, French group Lagardere’s Hachette Livre, Verlagsgruppe Georg von Holtzbrinck, which owns Macmillan in Germany, and Pearson’s Penguin group. Apple and the publishers, with the exception of Penguin, have offered to settle with the commission, which began its inquiry last December. The EU watchdog detailed the offer yesterday.

“For a period of two years, the four publishers will not restrict, limit or impede e-book retailers’ ability to set, alter or reduce retail prices for e-books and/or to offer discounts or promotions,” the commission said in its official journal.

It said the publishers and Apple also proposed to suspend “most-favoured nation” contracts for five years. The clauses barred publishers from making deals with rival retailers to sell e-books at prices lower than those set by Apple.

The EU watchdog said third parties have a month to provide feedback on the proposals. If the response is positive, the commission will end its investigation without an infringement finding.

If the offer were to be accepted, it would mean the publishers getting off relatively lightly, said Mario Todino, a partner at a Brussels-based law firm.

“The commitments are quite extensive and will more or less address the issues. However, the absence of a fine shows the commission being quite lenient, as the alleged infringements could be considered hard-core.

“The lenient stand could be the commission taking into account two elements, the relatively new e-book distribution model and the market power of a major retailer,” he said.

E-books account for 30% of the US market. and 20% of sales in Britain.

Reuters