There is much gnashing of teeth today in Toronto as the Canadian Competition Bureau defeats Kobo's years-long effort to avoid competing with Amazon.
Canada's business competition watchdog said on Friday it had reached an agreement with Apple and three major ebook publishers that will allow retailers to offer discounts to customers.
The Competition Bureau's investigation found that an arrangement between the publishers and Apple led to higher prices for Canadians.
The watchdog said it had entered into consent agreements with Apple, Hachette, Macmillan and Simon & Schuster that will let other retailers, including Amazon and Kobo, give discounts on ebooks by those publishers.
The Competition Bureau, however, was unable to reach an agreement with a fourth publisher involved, HarperCollins, and filed an application to order it to halt its alleged anti-competitive practices.
The U.S. Supreme Court last year declined to hear Apple's challenge to a court decision that it conspired with five publishers to increase ebook prices.
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Both Kobo and Amazon were queried for comment; the latter has not responded, but Kobo released the following statement.
"We will review the decision that has been made, and will work with publishers as their terms change," said Michael Tamblyn, CEO, Rakuten Kobo. "We will continue to offer our customers the best eReading experience here in Canada as we do around the world. Everything we do is for the reader; as always, we will continue to offer Canadian consumers a great selection of books with regular promotions and discounts, taking advantage of these changes to encourage even more people to read digitally."
You should take Kobo's statement with a grain of salt; this is the same company that spent two and a half years fighting a 2014 settlement agreement which would have ended agency pricing in Canada.
Kobo appealed that agreement, arguing that they could not compete effectively with Amazon if ebook retailers were allowed to lower prices. They won their appeal in June of last year, forcing the CCB to discard the 2014 agreement.
And now their work has come undone - but you shouldn't celebrate just yet.
Yes, Apple and three publishers have settled, but what were the terms of the settlement? Are consumers really going to benefit?
Remember, when the DoJ settled with 5 publishers in 2012 and 2013, that agreement allowed for only limited discounting. And then that agreement expired, after which agency pricing returned to the US ebook market.
Will Canada follow a similar path?
The CCB has not released the settlement agreement itself, so that question cannot be answered.
Edit: The settlement agreements are pretty weak tea. All four companies agreed to give up MFN clauses for three years, and the publishers agreed to give up agency pricing for a grand total of nine months.
That's not nine years or nineteen months; we're talking three quarters of price competition in Canada before the publishers can reassert control.
- Consent agreement with Apple
- Consent agreement with Hachette
- Consent agreement with MacMillan
- Consent agreement with Simon & Schuster
Reporting by Leah Schnurr, editing by G Crosse, commentary and background by Nate Hoffelder
image by statschew