Apple and four major publishers have offered to let retailers such as Amazon sell e-books at a discount to settle an EU antitrust investigation into their pricing deals and avoid possible fines.
The case highlights the battle between retailers and publishers over pricing control as publishers look to e-books to boost revenues, cut costs and reach bigger audiences.
EU regulators have been investigating Apple's e-book pricing deals with Simon & Schuster, News Corp unit HarperCollins, French group Lagardere SCA's Hachette Livre, Verlagsgruppe Georg von Holtzbrinck, which owns Macmillan in Germany, and Pearson Plc's Penguin group.
Publishers switched to the agency model with Apple in 2010, under which they set the price of e-books and Apple took a 30 percent cut. The wholesale model favored by Amazon and other sellers gave retailers pricing power.
According to analysts at UBS, e-books account for about 30 percent of the U.S. book market and 20 percent of sales in Britain, but are still negligible elsewhere.
deej wrote:I know we hate Amazon...
WASHINGTON – The Department of Justice announced today that it has reached a settlement with Penguin Group (USA) Inc.–one of the largest book publishers in the United States–and will continue to litigate against Apple Inc. and Holtzbrinck Publishers LLC, which does business as Macmillan, for conspiring to raise e-book prices to consumers.
Today’s proposed settlement was filed in the U.S. District Court for the Southern District of New York. If approved by the court, the settlement will resolve the department’s competitive concerns as to Penguin, ending Penguin’s role as a defendant in the civil antitrust lawsuit filed by the department on April 11, 2012.
The department’s Antitrust Division previously settled its claims against three book publishers–Hachette Book Group Inc., HarperCollins Publishers L.L.C. and Simon & Schuster Inc. The department said that the publishers eliminated retail price competition, resulting in consumers paying millions of dollars more for their e-books. The settlement with those three publishers was approved by the court in September 2012. A trial against Macmillan and Apple currently is scheduled to begin in June 2013.
Under the proposed settlement agreement, Penguin will terminate its agreements with Apple and other e-books retailers and will be prohibited for two years from entering into new agreements that constrain retailers’ ability to offer discounts or other promotions to consumers to encourage the sale of the Penguin’s e-books. The proposed settlement agreement also will impose a strong antitrust compliance program on Penguin, which will include a requirement that it provide advance notification to the department of any e-book ventures it plans to undertake jointly with other publishers and that it regularly report to the department on any communications it has with other publishers. Also for five years, Penguin will be forbidden from agreeing to any kind of most favored nation (MFN) agreement that could undermine the effectiveness of the settlement.
The department is currently reviewing the proposed joint venture announced by Penguin and Random House Inc., the largest U.S. book publisher. Should the proposed joint venture proceed to consummation, the terms of Penguin’s settlement will apply to it.
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