Boost for Amazon as Penguin agrees to end Apple e-books deal

The deal brings to an end the EU anticompetition case on e-books

By Jennifer Baker, IDG News Service |  Legal

Image credit: REUTERS/Stefan Wermuth

Penguin has agreed to terminate its e-book agreement with Apple and to allow Amazon to set its own prices for electronic books in a settlement of a European Union antitrust case.

The European Commission accepted the deal with Penguin on Thursday after more than a year of investigations into allegations of cartel price fixing in the e-book market.

Four other e­book publishers -- Simon & Schuster, HarperCollins, Hachette Livre and Macmillan -- together with Apple were originally included in the investigation, but they agreed to terms with the Commission last December.

The Commission concluded that an infringement had probably taken place when the five publishers and Apple jointly switched from a wholesale model to an agency sale model. Under a wholesale model, the retailer is free to set the price, but with an agency model, the retail price of e­books is determined by the publishers.

It appeared that the alleged cartel wanted to limit retail­price competition, particularly with regard to Amazon, which was the uncontested leader in the retail market for e­books at the time of the change to the agency model, said the Commission.

Like Apple and the other publishers, Penguin has agreed to terminate the current agency agreements and will not hamper e-book retailers, such as Amazon, from setting their own prices for e­books or from offering discounts and promotions for the next two years. Penguin first offered these commitments in April, but they will now become legally binding.

E.U. Competition Commissioner Joaquín Almunia said the deal would restore "a competitive environment in the market for e-books."

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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