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EU raids e-book publishers over price fixing

updated 10:50 pm EST, Wed March 2, 2011

EU investigates publishers over e-book deals

The European Commissionpreliminary UK investigations and suspected the unnamed companies of having "violated EU antitrust rules" by pushing for the agency model in the iBookstore, the Kindle Store and other portals. The structure lets publishers set the pricing and has raised worries of collusion and price fixing that would keep e-books artificially expensive.

Most of the focus so far is believed to have been on more regional publishers such as France's Albin Michel and Hachette Livre, while HarperCollins, Penguin and Random House haven't witnessed raids so far.

Representatives for the Commission were cautious not to make conclusions and said the investigation was in a "very early stage." Any in-depth result could potentially draw in UK investigators to eliminate overlap.

A formal legal action could have deep ramifications for Amazon and Apple. Most major publishers switched to the agency model after Apple hoped to lure them away with more favorable terms. Until the switch, publishers on the Kindle Store and other shops mostly adhered to a wholesale model, where the store owner set the price and publishers charged a flat rate. The method led to lower prices, often $10 or less at Amazon, but led to complaints from publishers. Most were concerned that Amazon was regularly selling below cost and setting artificial expectations for e-book pricing that couldn't be met in the long term.

Amazon was a strong advocate of wholesale, which it used to inflate Kindle market share, but was strongarmed both after the agency model switch and Apple's "most favored nation" terms, which would have prevented publishers from offering a better price elsewhere. [via WSJ]




by MacNN Staff

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Comments

  1. aristotles

    Joined: Dec 1969

    +1

    Uh... agency model promotes free market.

    The prices will come down through competition. The wholesale model hurt publishers and allowed the seller to "price fix". Who is behind this "investigation"? Follow the money.

  1. Flying Meat

    Joined: Dec 1969

    +2

    Wait. Publishing? Artificially expensive?

    As I recall, whenever the traditional book publishing subject comes up, publishers are often painted as struggling to make a profit.

    You wanna check into price fixing? Check the school book market. Those prices are absolutely burdensome.

  1. testudo

    Joined: Dec 1969

    +1

    Re: Uh... agency model promotes free market.

    The prices will come down through competition. The wholesale model hurt publishers and allowed the seller to "price fix". Who is behind this "investigation"? Follow the money.

    Nope, we don't want publishers to set up a price per book. That's too confusing for the consumer. Books should be like songs. One price fits all. Oh, wait, that was Amazon's idea. Right, that can't work. Nevermind, we need the publishers to be able to define their prices!

    Oh, and I like how the 'wholesale model' hurts publishers because it lets the seller fix prices, and yet that's all Apple did for years with the iTMS, price fixing songs regardless of what the seller wanted. Yet that was 'OK'.

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