European Commission Targets Apple, Publishers in E-Books Antitrust Probe
December 6, 2011 12:55 PM
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The European Commission has announced that it is opening a formal antitrust investigation into whether five international e-book publishers have been practicing anti-competitive tactics with the help of Apple
The European Commission has launched an antitrust investigation Tuesday that will determine if
international e-book publishers
and Apple have been partaking in anti-competitive activities.
Back in March of this year, the European Commission raided various e-book firms to see whether the sale of e-books breached competition rules. Around the same time, the Office of Fair Trading (OFT) in the United Kingdom launched its own investigation into e-book prices. The European Commission and OFT had been working together through the year on the probe, but the OFT is now shutting its investigation down.
Now, the European Commission has announced that it is opening a formal antitrust investigation into whether five international e-book publishers have been practicing anti-competitive tactics with the help of Apple and its e-book store iBooks.
The five e-book publishers targeted in the investigation are Hachette Livre (Lagardère Publishing France), Harper Collins (News Corp., U.S.A.), Simon & Schuster (CBS Corp., U.S.A.), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany).
"The Commission will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or effect of restricting competition in the EU or in the EEA," said the European Commission's press release. "The Commission is also examining the character and terms of the agency agreements entered into by the above named five publishers and retailers for the sale of e-books."
The European Commission noted that the opening of proceedings indicates that this antitrust case will be treated as a "matter of priority."
There has been quite a bit of e-book drama over the last few months. For instance, the Authors Guild posted
an angry blog entry
about Amazon's Kindle Owners' Lending Library, and just last month,
Penguin suspended the availability of its e-books to libraries
saying that libraries are not allowed to loan e-books for the Kindle. Penguin even went to business partner OverDrive asking that it eliminate its "Get for Kindle" button for Penguin books.
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Should be a slam dunk
12/6/2011 1:14:20 PM
Apple's "most favored nation" clause alone should make this case an anti-trust slam dunk.
Apple requires that the price that is provided to their customers is no higher than prices else where. Apple also insists on taking 30% of the cut. Therefore Apple only pays 70% to the content provider of what any competitor would have to pay to get the same content.
It is clearly anti-competitive.
RE: Should be a slam dunk
12/6/2011 2:11:19 PM
Not quite. The distributor takes a payment for each item sold. Apple sets this payment at 30% of gross for apps. Possibly the same for ebooks and emusic, but that is not writ in stone.
Amazon in addition to selling almost exclusively a proprietary format that is only compatible with Amazon devices or software also takes a cut of the selling price for all items listed on the Amazon website. This is a mark-up for items that Amazon resells in it's role as a retailer and a commission (percentage, fixed fee or both) for third party sellers when the purchase is made from the Amazon website.
Any ebook store that is not directly controlled by the publisher (in a few cases it is the author publishing the e-edition) is being paid a fee that is taken out of the price the customer pays before the remainder is passed on to the publisher
These fees can vary widely. For a real world example, a tool company I worked for years ago gave discounts to their resellers according to the volume they expected to move. the scale started at 10% off list and went up to 30% off list for distributors who where passing the parts on as a middleman. Then a large company with a national reputation contracted them as a private label supplier. The volume was equal to about half of their production at the time of this offer. For a customer that would be buying a third of their total production, they agreed to 60% off list.
The amount paid to the publisher varies widely according to the reseller agreement. Whenever possible I buy from the author/publisher directly. As a bonus, I buy books for prices ranging from $3 to $7 ... Amazon is more expensive and does not carry many of the ebooks that I buy. I don't know about the Apple ebook store. I use an iPod as a pocket book reader, but I have never looked at the Apple bookstore...my ebooks all come from non-Apple stores.
RE: Should be a slam dunk
12/6/2011 2:49:51 PM
Do you even know what a "most favored nation" clause is?
It is a contract mechinism that prevents free market negotiations with competiting vendors. Both Amazon and Apple are using them against the publishers. If you cannot manage to negotiate a similar deal, then you simply can't compete in the market. This directly leads to price fixing and collusion.
"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone
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