Publishers face Euro ebook probe

09 December 2011

BRUSSELS: The European Commission is to investigate the agency model of selling ebooks to digital platforms, in a move that could impact on prices.

Apple's agency agreements with five publishers of digital books – Penguin, HarperCollins, Hachette, Simon & Schuster and Holtzbrinck – is to be probed by the commission's antitrust regulator.

The US tech firm announced the deals alongside the launch of the iPad in 2010. Agency agreements of this kind allow publishers a degree of freedom to set the prices at which their ebooks are sold to consumers.

While Apple and its publishing partners pioneered the agency agreement, this way of selling ebooks is now followed by other players including market leader Amazon.

Prior to the rise of the agency deals, Amazon's priced according to the "wholesale model", allowing the vendor total freedom to set the prices at which ebooks would actually be sold to consumers.

This allowed Amazon, which owns the Kindle, the market-leading e-reader, to sell many of its ebooks at deep discounts.

Announcing the probe, the European Commission pointed out that the investigation had only just begun, and that it may find no wrongdoing.

In a statement, the regulator said: "The Commission will in particular investigate whether ... publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition in the EU or in the EEA."

It added: "The Commission has concerns that [the agency agreements] may breach EU antitrust rules that prohibit cartels and restrictive business practices."

In March 2011, the Commisson announced that it had carried out "unannounced inspections" of digital publishers' offices due to concerns they had breached antitrust rules.

Commenting on the investigation, Benedict Evans, a consultant at media monitoring firm Enders Analysis, told the Guardian: "What the publishers have done is stopped Amazon from crushing the entire independent ebook retail sector.

"The drive to lower prices is not of itself automatically good for consumers if it leads to a situation where there is only one place you can buy ebooks."

Data sourced from European Commission/Fortune/Financial Times/Guardian; additional content by Warc staff