December 6, 2011
EU Opening Anti-Trust Investigation With Apple Over E-Books
The European Union has opened an investigation on whether a deal struck by Apple and five other publishers was an illegal move.
The probe is focusing on a controversial system known as the "agency model" which was an agreement made by Apple and several publishers.This model allows publishers to set the prices at which books are sold on the Internet and also for the retailer, inevitably making e-books more expensive than hardcopies.
The European Commission announced on Monday that it had opened a "formal" investigation into the process, which it worries could produce cartels and "restrictive business practices."
The investigation will look at deals between Apple and five major publishers, including Penguin, Hachette Livre, Harper Collins, Simon & Schuster and MacMillan.
The commission said in a statement that the five "possibly with the help of Apple, engaged in anti-competitive practices affecting the sale of e-books in the European Economic Area, in breach of EU antitrust rules".
Due to competitiveness, the price of e-books had been driven down to an average of 25 percent-off their recommended retail price.
Publishers have been annoyed by this because it has led to a huge disparity between the price of digital books and real books.
The powerhouse publishers decided to sign the agency agreement with Apple's iBookstore last year in order to try and counteract this.
The EU Competition Commissioner Joaquin Almunia said in November that he wanted to fight "artificial restrictions imposed by some companies to cross-border trade” which are “particularly important in the digital area where I have already started to look at the distribution practices of certain products such as e-books.”
The discrepancy has lead some electronic books to cost more than a hardback version of the same book.
The probe will examine the character and terms of agreements between the five publishing houses and retailers for the sale of e-books.
The group who owns Penguin publishing house said that it "does not believe it has breached any laws, and will continue to fully and openly cooperate with the Commission."
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