Antitrust: Commission accepts legally binding commitments from Simon & Schuster, Harper Collins, Hachette, Holtzbrinck and Apple for sale of e-books

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The European Commission has adopted a decision that renders legally binding commitments offered by Apple and four international publishers – Simon & Schuster (CBS Corp., USA), Harper Collins (News Corp., USA), Hachette Livre (Lagardère Publishing, France), Verlagsgruppe Georg von Holtzbrinck (Germany; owner of inter alia Macmillan). The Commission had concerns that these companies may have contrived to limit retail price competition for e-books in the European Economic Area (EEA), in breach of EU antitrust rules. To address these concerns, the companies offered in particular to terminate on-going agency agreements and to exclude certain clauses in their agency agreements during the next five years. The publishers have also offered to give retailers freedom to discount e-books, subject to certain conditions, during a two-year period. After a market test, the Commission is satisfied that the final commitments remedy the identified competition concerns it had identified.

Joaquín Almunia, Commission Vice-President in charge of competition policy, said: “While each separate publisher and each retailer of e-books are free to choose the type of business relationship they prefer, any form of collusion to restrict or eliminate competition is simply unacceptable. The commitments proposed by Apple and the four publishers will restore normal competitive conditions in this new and fast-moving market, to the benefit of the buyers and readers of e-books”.

The Commission opened proceedings in December 2011 against these companies as well as a fifth international publisher, Penguin (Pearson group, United Kingdom). The Commission had doubts concerning the joint switch by these companies from a wholesale model, where the retail price of e-books is determined by the retailer, to agency contracts that contained the same key terms for retail prices – including an unusual retail price Most Favoured Nation (MFN) clause, maximum retail price grids and the same 30% commission payable to Apple. The Commission was concerned that the switch to these agency contracts may have been coordinated between the publishers and Apple, as part of a common strategy aimed at raising retail prices for e-books or preventing the introduction of lower retail prices for e-books on a global scale. Here to read more.

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