The European Commission is inviting comments from interested parties on commitments offered by Penguin (Pearson Group, United Kingdom). The proposed commitments aim to alleviate concerns that Penguin may have engaged in an anti-competitive concerted practice affecting the sale of e-books in the European Economic Area (EEA). They are substantially the same as those proposed by Simon & Schuster, Harper Collins, Hachette, Holtzbrinck and made legally binding by the Commission in December 2012. If the market test confirms that Penguin’s commitments are suitable to address the Commission’s competition concerns, the Commission may make them legally binding on Penguin.
The Commission considers at this stage that Penguin, together with the aforementioned four publishers and Apple may have breached EU antitrust rules that prohibit cartels and restrictive practices by jointly switching the sale of e-books from a wholesale model to agency contracts containing the same key terms (in particular an unusual so-called “Most Favoured Nation” – MFN – clause for retail prices). The agency model allows more control by publishers over retail prices. The Commission has concerns that this switch may have been the result of collusion between competing publishers, with the help of Apple, and may have aimed at raising retail prices of e-books in the EEA or preventing the emergence of lower prices.
In the proposed commitments, Penguin offers to terminate existing agency agreements and refrain from adopting price MFN clauses for five years. In case Penguin would enter into new agency agreements, retailers would be free to set the retail price of e-books during a two-year period, provided the aggregate value of price discounts granted by retailers does not exceed the total annual amount of the commissions that the retailer receives from the publisher.
Interested parties can submit comments within one month from the date of publication. Here to read more.