Thursday, September 20, 2012
In the EU, Four Publishers (Not Penguin) and Apple Offer to Settle
HarperCollins, Hachette, Macmillan and Simon & Schuster have joined with Apple in offering to settle with the European Commission over the introduction of agency ebook pricing in Europe, "with a view to seeking an early resolution of the case." The Commission is "still investigating Pearson's conduct" and its "compatibility" with EU regulations.
The proposed settlement closely mirrors conditions that three of those publishers have already agreed to in the US. As in the US, Apple's existing agency agreements with the Settlers as well as Penguin will be terminated and the most favored nations clause will be barred, and the Settlers' other agency contracts will also be terminated. Agency Lite will in place for two years, with the same ability to limit a retailer's total discounts and incentives to customers to no more than their total commissions earned in a year. And MFNs will be barred for five years.
There is a one-month period for comments--or what the EC calls a "market test"--before the commission "may make them legally binding on the companies." The EC notes that "the four publishers and Apple do not agree with the Commission’s preliminary assessment. They have nevertheless offered commitments...in order to meet the Commission’s competition concerns. These commitments are without prejudice to national laws which allow or oblige publishers to set the retail price for e-books at their own discretion ('RPM laws')."
In a statement, Hachette Livre emphasized the company "remains confident that it did not violate the antitrust laws, and has made no admission of liability. Hachette Livre considers that its unilateral decision to enter into agency agreements with Apple and other e-retailers was in the best longer-term interests of the whole book universe including authors, readers and booksellers of all kinds. However, Hachette Livre has decided that the costs, length, and distractions of the proceedings before the European Commission would be too disruptive to its business and to the development of e-book markets in general.
So far, the EC's finding is less aggressive than the cases in the US as well. It is a "preliminary assessment" in which "the Commission took the preliminary view that, by jointly switching the sale of e-books from a wholesale model to an agency model with the same key terms on a global basis, the Four Publishers and Apple engaged in a concerted practice with the object of raising retail prices of e-books in the EEA or preventing the emergence of lower prices in the EEA for e-books in breach of" EC provisions. By agreeing to a settlement, the parties avoid the threat of the larger fine that can be imposed under EU antitrust rules, without a formal trial: "If a company breaks such commitments, the Commission can impose a fine of up to 10% of its annual worldwide turnover, without having to find an infringement of the antitrust rules."