Big Publishers Face European Cartel Probe Over E-Books


(CN) – The European Commission is investigating Apple and five publishers over a potential e-books cartel, following the lead of federal class action claims in the United States.



     The publishers at issue are France-based Hachette Livre, Rupert Murdoch’s Harper Collins, U.S.-owned Simon & Schuster, U.K.-based Penguin and Germany’s Verlagsgruppe Georg von Holzbrinck, which owns Macmillan.
     The probe by the European Union’s executive branch, announced last week, follows an federal antitrust class action filed against the same companies in California this past August.
     The investigation is looking at whether so-called agency agreements brokered between Apple and the publishers increased the price of electronic books after Apple’s release of the iPad and iBookstore in 2010.
     In the agency model, vendors sacrifice consumer discounts by allowing publishers to directly set retail prices. Once one retailer implements this model, others may be forced to follow suit in order to secure sales rights.
     Apple’s actions have forced Amazon to switch over to this model, the class action claims.
     This has made the price of e-books increase by as much as half, the suit says.
     Apple allegedly implemented the agreements to dominate the e-book market and prevent devices such as Amazon’s Kindle e-book reader from breaking into other media markets.
     The U.S. class action accuses Apple of using “a virtually identical strategy to gain a virtual monopoly on the distribution of digital music files” through iTunes.
     The European Commission had raided several e-book publishers across Europe this past March. The U.K.’s trade office ran a parallel investigation, which it closed before the commission made its announcement.
     The AP reported that Pearson and Holtzbrinck have denied any wrongdoing. Harper Collins and Simon & Schuster are apparently cooperating with the investigation, while Apple and Hachette Livre declined to comment.
     The five publishers dominate that sector, while Apple has become one of the world’s largest technology companies.

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