Apple, publishers agree to settle EU e-book price-fixing inquiry

Posted:
in General Discussion edited January 2014
Apple and four major publishing houses agree to kill off an e-book price-setting system in the European Union in hopes of ending an antitrust investigation over the matter.

The European Commission said on Wednesday that it is willing to drop its probe into an alleged price-fixing scheme by Apple, Simon & Schuster, HarperCollins, Hachette Livre and Verlagsgruppe Georg von Holtzbrinck, after the companies agreed to let online retailer Amazon sell the same e-books at discounted prices for a period of two years. The agreement is currently undergoing peer review, reports The New York Times.

European Commission
EU flags flying in front of the European Commission's headquarters in Brussels, Belgium. | Source: European Commission


First launched in December 2011, the Commission's inquiry is in related to Apple's so-called "agency model," which allows book publishers to set the prices for e-books sold in the iBookstore under a most favored nations clause, meaning the houses couldn't sell their product elsewhere for a lower price. If the investigation were to have found the companies in violation of European antitrust laws, each faced penalties equaling up to 10 percent of revenue from global sales.

With the settlement, the companies agree to dismantle the most favored nations clause. If the peer review is in favor of the agreement, the Commission said it might work to make the plan legally binding, and in doing so would end the antitrust case without an admission of guilt from the parties.

While Apple and the four publishing houses agreed to the settlement terms, Penguin Group is holding out and remains under investigation.

Wednesday's announcement is similar to the counterpart price-fixing case in the U.S. leveled by the Department of Justice in which HarperCollins, Simon & Schuster and Hachette recently settled for $69 million. Apple, Penguin Group and Macmillan continue to fight the allegations, with both companies asking for a court trial to decide the matter.
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Comments

  • Reply 1 of 29
    hill60hill60 Posts: 6,989member


    So they removed the "most favoured nation" clause, which technically is not "price fixing", with no issues over the use of an agency model.


     


    This is different to the US where the DoJ wants to dismantle the entire agency model based contracts.


     


    Apple is innocent they will be exonerated, as they were in Europe.

  • Reply 2 of 29
    boredumbboredumb Posts: 1,405member

    Quote:

    Originally Posted by hill60 View Post


    Apple is innocent they will be exonerated, as they were in Europe.



    Clearly, you have a special dictionary, in which "capitulation" and "exoneration" mean the same thing...


    Did you get it in the App Store, by any chance?

  • Reply 3 of 29
    hill60hill60 Posts: 6,989member

    Quote:

    Originally Posted by boredumb View Post


    Clearly, you have a special dictionary, in which "capitulation" and "exoneration" mean the same thing...


    Did you get it in the App Store, by any chance?



     


    Were they found guilty of price fixing in Europe?


     


    The answer is NO, NON, NEIN, NEI, EI, NE, NEE, NEEN, NÃO.


     


    They made a minor tweak to one clause and kept their existing agreements in place.

  • Reply 4 of 29
    john.bjohn.b Posts: 2,713member


    For all the talk about how "consumer-oriented" the EU is supposed to be, this just grants Amazon the same virtual monopoly on ebooks that they now have in the US.  Bezos and his buddies now have free reign to dictate low-ball deals to authors as well as the potential to require Kindle versions for authors wanting to sell physical books on Amazon's European stores.

  • Reply 5 of 29
    oomuoomu Posts: 127member


    it's very bad news for editors and authors.


     


    They need to control THEIR price and to avoid consumers think books should be sell for mostly nothing...


     


    The market is not fine at all with so low price.

  • Reply 6 of 29

    Quote:

    Originally Posted by hill60 View Post


     


    Were they found guilty of price fixing in Europe?


     


    The answer is NO, NON, NEIN, NEI, EI, NE, NEE, NEEN, NÃO.


     


    They made a minor tweak to one clause and kept their existing agreements in place.



     


    Well, a settlement like this is just that, a settlement, that has no implication on whether Apple was right or wrong. Nothing to be unhappy about, but nothing to be happy about either. Amazon still got to lower prices for 2 years.

  • Reply 7 of 29

    Quote:

    Originally Posted by oomu View Post


    it's very bad news for editors and authors.


     


    They need to control THEIR price and to avoid consumers think books should be sell for mostly nothing...


     


    The market is not fine at all with so low price.



     


    Actually the authors can control their prices. They just have to avoid using those big publishers. You got it all wrong, authors can always just sell the books by printing their own books and negotiate their own contracts with any retailers if they want to control the price. In fact, by using those big publishers, the authors voluntarily give up the rights to control the price.

  • Reply 8 of 29


    Done, just time for the other shoe to fall in the US - Regardless The FEDs and EU got what they wanted already, Kill Agency Model as a norm.

  • Reply 9 of 29
    hill60 wrote: »
    Were they found guilty of price fixing in Europe?

    The answer is NO, NON, NEIN, NEI, EI, NE, NEE, NEEN, NÃO.

    They made a minor tweak to one clause and kept their existing agreements in place.

    Didn't say they were innocent neither, if they were then why the settlement?
  • Reply 10 of 29
    richlrichl Posts: 2,213member

    Quote:

    Originally Posted by John.B View Post


    For all the talk about how "consumer-oriented" the EU is supposed to be, this just grants Amazon the same virtual monopoly on ebooks that they now have in the US.  Bezos and his buddies now have free reign to dictate low-ball deals to authors as well as the potential to require Kindle versions for authors wanting to sell physical books on Amazon's European stores.



     


    EU competition laws apply to all companies trading in the EU. If Amazon does something anti-competitive, and someone complains, they will be investigated. Just like Apple, just like Microsoft.

  • Reply 11 of 29
    hill60hill60 Posts: 6,989member

    Quote:

    Originally Posted by agramonte View Post


    Done, just time for the other shoe to fall in the US - Regardless The FEDs and EU got what they wanted already, Kill Agency Model as a norm.



     


    The agency model has been approved in Europe, the agency agreements stand, one clause was modified.


     


    So now that Amazon won't be able to blame Apple as an excuse for increasing their prices, it will be interesting to see what discounts they apply.

  • Reply 12 of 29
    hill60hill60 Posts: 6,989member

    Quote:

    Originally Posted by dasanman69 View Post





    Didn't say they were innocent neither, if they were then why the settlement?


     


    Who knows.


     


    Perhaps it's due to the EU respecting the legitimacy of the agency model, unlike the bureaucratic idiots at the United States DoJ.

  • Reply 13 of 29
    hill60 wrote: »
    Who knows.

    Perhaps it's due to the EU respecting the legitimacy of the agency model, unlike the bureaucratic idiots at the United States DoJ.

    Makes sense when you put it that way.
  • Reply 14 of 29
    jragostajragosta Posts: 10,473member
    agramonte wrote: »
    Done, just time for the other shoe to fall in the US - Regardless The FEDs and EU got what they wanted already, Kill Agency Model as a norm.

    That's not what it says at all. The Agency Model was left intact in the EU. Only the MFN clause was removed.

    Given the choice between choosing the agency model or MFN, it's not suprising that Apple chose the agency model and was willing to let MFN go.
  • Reply 15 of 29
    john.bjohn.b Posts: 2,713member

    Quote:

    Originally Posted by RichL View Post


    EU competition laws apply to all companies trading in the EU. If Amazon does something anti-competitive, and someone complains, they will be investigated. Just like Apple, just like Microsoft.



     


    After they've effectively killed off their competition?


     


    Good on 'em!  /sarcasm


     


    :shakeshead:

  • Reply 16 of 29

    Quote:

    Originally Posted by hill60 View Post


     


    Were they found guilty of price fixing in Europe?


     


    The answer is NO, NON, NEIN, NEI, EI, NE, NEE, NEEN, NÃO.


     


    They made a minor tweak to one clause and kept their existing agreements in place.



     


    This is the corporate equivalent of pleading "No contest." They didn't admit to wrong doing, but they certainly decided to stop fighting the allegations and folded to the EU's demands.


    In other words, they pulled a Lance Armstrong. They never found him guilty either, he just stopped fighting back. Would you consider him the winner in that scenario too?


    For as loyal as you are to Apple, I sure hope you're on the payroll, or at least got a free T-shirt at some point.

  • Reply 17 of 29

    Quote:

    Originally Posted by hill60 View Post


     


    The agency model has been approved in Europe, the agency agreements stand, one clause was modified.


     


    So now that Amazon won't be able to blame Apple as an excuse for increasing their prices, it will be interesting to see what discounts they apply.



     


    The firing pin is just one tiny component in the grand mechanism of a gun. Remove it, though, and see how effective that gun is without it.


     


    And Amazon blamed Apple for their inability to DECREASE prices, hence the complaint that lead to both investigations here and in the EU.

  • Reply 18 of 29
    Actually the authors can control their prices. They just have to avoid using those big publishers. You got it all wrong, authors can always just sell the books by printing their own books and negotiate their own contracts with any retailers if they want to control the price. In fact, by using those big publishers, the authors voluntarily give up the rights to control the price.

    Yeah, bc the authors can print their own books? That cost money.... That's why publishers exist.

    Distribution - thousands of hours @$400 an hour for a lawyer to have different contracts with every potential retailer. Many of these hours won't conclude with an agreement = wasted money
    Distribution is why authors use publishers....

    While I hate the publisher oligopoly, you have no clue what you are talking about and how much work and money your alternative suggestion requires. I dislike personal attacks but your arguement sounds like a first or second year Econ or Biz school student. You espouse theory but have no idea how to apply it to this situation or the rest of the real world.

    BTW, Amazon can change the price and profit of an "Indie" book at will, drawing the book's potential buyers to Amazon from print or other ebook distributors which are more profitable for the author.
  • Reply 19 of 29
    nasseraenasserae Posts: 3,152member
    Before the iPad Amazon was able to lose money on ebooks because they used to make it up by making big profit on the Kindle. Now the situation is different and Amazon is in tough position here. They will lose money on ebooks and make no money on Kindle. Furthermore, two years is not enough for them to take back control in the ebook business. Especially not now with Apple and others improved foothold.
  • Reply 20 of 29


    Without collusion, Apple has no chance to compete with Amazon in ebook sales. Authors, the true talent in the book publishing industry, will ditch traditional publishers and self-publish their books on Amazon. As the publishers die off, Apple will have no books to sell.


     


     


    Amazon has the Kindle Direct Publishing program where authors can bypass traditional publishers and sell their books on Kindle readers and devices with the Kindle app. That includes Kindle tablets, iPad, iPhone, iPod touch, PC, Mac, BlackBerry, and the numerous Android-based devices.


     


     


    Sure Apple has iBooks Author, but books created with it are only viewable on the ipad and nothing else.  "..iBooks Author is an amazing new app that allows anyone to create beautiful Multi-Touch textbooks — and just about any other kind of book — for iPad."


     


     


    One author had received hundreds of rejections from publishers for her numerous books. After publishing with KDP, she sold over 300,000 books, including four Top 100 Kindle Best-Sellers.


    Another author was turned down by 7 publishers in 4 months. The publishers all said they can't take a gamble on an unknown author. She then wrote her first book with KDP and it became #2 in the Kindle store.



     


     


    If you were an author, would you go with a traditional publisher with high overhead who may, may not, promote your book? Or self publish where you make 70%? And do you self-publish with the company that is only able to sell on 1 platform or the company that sells with 10s, if not 100s of platforms?


     


     


    One more thing,...since Apple and publishers have agreed to settle, that means they were guilty.

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