BERLIN — The European Commission settled its antitrust case against Apple and four book publishing groups over e-book price fixing on Thursday, in what was described as a victory for the leading online seller, Amazon, and a setback for publishers fighting for the ability to set prices for electronic literature in the digital marketplace.
The European Union’s competition commissioner, Joaquín Almunia, said he was ending his office’s investigation after Apple and the publishers — Simon Schuster, HarperCollins, Hachette, and Holtzbrinck, the owner of Macmillan — agreed to end their attempt to set prices for e-books through a series of preferred selling agreements.
Under those agreements, made in 2010, publishers could set their own prices on e-books, with the retailer acting as an agent taking a commission. Apple championed this agency model.
For print books, by contrast, publishers act as wholesalers, charging retailers about half the cover price for a book and then allowing retailers to set their own price to consumers. Amazon built a huge business by offering consumers discounts under this wholesale model.
Publishers fear that under the wholesale model, Amazon can sell e-books for less than it pays, taking a loss in the short term to drive smaller competitors out of business, thus gaining a monopoly, to the detriment of the publishers.
European Union officials, however, see things differently: that collusion by publishers would lead to higher prices for consumers.
“Obviously, the coordination of commercial behavior between competitors — here, with the help of Apple — is forbidden by our competition rules,” Mr. Almunia said in Brussels in a statement. “Whatever the publishers’ initial concerns about retail prices, dealing with this situation through collusion is not acceptable.”
Under terms of the settlement, Apple and the publishers agreed to immediately end their preferred agency agreements, the legal pacts that contained “most favored customer” clauses effectively blocking sales to price discounters. Apple and the publishers, Mr. Almunia said, tried to make the agreements standard in the industry.
Amazon and other online retailers that refused to agree to the group’s pricing terms, Mr. Almunia said, “were told they might not be supplied with e-books if they did not agree to the switch.”
“Retailers had little option but to surrender their discretion in setting retail prices if they wanted to avoid a serious disruption of their business,” he said.
The decision by Mr. Almunia, a Spanish jurist who has set a pattern of compromise since becoming Europe’s top antitrust officer in February 2010, followed a similar resolution in the United States. In September, a federal judge approved the U.S. Justice Department’s settlement with HarperCollins, Simon Schuster and Hachette.
Mr. Almunia had opened the European investigation in December 2010. He had signaled recently that a compromise was in the works, and the announcement on Thursday was seen as no surprise by European competition lawyers.
Jean-François Bellis, a lawyer in Brussels who represented Microsoft in its own multiyear European antitrust case, said Mr. Almunia’s settlement in the e-book case reflected his preference for fast, inexpensive solutions to corporate attempts to abuse market dominance.
“This is something indeed that was expected,” Mr. Bellis said. “I am seeing more and more that the commission is resorting to settlements. This is a more practical approach than fines and lengthy prosecutions.” Apple benefits from the resolution because it will not have to pay a fine, Mr. Bellis said.
The regulator’s decision will not help the fragile situation of many publishers, said Françoise Dubruille, director of the European and International Booksellers Federation, a Brussels group representing the 27 E.U. national bookselling organizations, which in turn have many small and medium-size publishers, in addition to large groups, as members.
Ms. Dubruille said the settlement would effectively further Amazon’s ability to set the purchase price of e-books in Europe, which would not help a struggling publishing industry.
“We aren’t happy about this,” Ms. Dubruille said of the decision. “We think the big players in this industry have disproportionate power and influence in the digital market. We want to see fair competition. This might look like a victory for consumers, but in the long run, this is bad news, because the pressures on prices will increase.”
Apple and Amazon did not immediately respond to requests for comment.
Article source: http://www.nytimes.com/2012/12/14/technology/in-europe-publishers-dealt-a-setback-over-e-book-pricing.html?partner=rss&emc=rss