Canadian Competition Bureau Strikes Deal With 4 Publishers, Ends Agency Pricing
Late last week the Canadian Competition Bureau announced that they had worked out a deal with 4 major publishers, Hachette, HarperCollins, Macmillan, and Simon & Schuster, to end agency pricing on their ebooks.
The Competition Bureau had been investigating this aspect of the Canadian publishing industry for the past 18 months, and as a result of that investigation the Bureau has concluded that publishers engaged in conduct that violated the country’s Competition Act. And rather than pursue legal action, the Competition Bureau has negotiated a settlement with 4 publishers.
The settlement (or consent decree) was posted last week (PDF). The terms are fairly simple and for the most part parallel the settlement that the US DOJ made with the 5 publishers in the US.
No financial penalties have been assessed, but Hachette, HarperCollins, Macmillan, and Simon & Schuster have agreed to renegotiate their contracts with ebook retailers. Under the new contracts the publishers will be required to give up the most favored nation clause and allow retailers to set ebook prices. They have 40 days to negotiate new contracts.
The consent decree is pretty clear in what the publishers cannot do under the new contracts. They cannot:
restrict, limit or impede an E-book Retailer’s ability to set, alter or reduce the Retail Price of any E-book for Sale to consumers in Canada or to offer price discounts or any other form of promotions to encourage consumers in Canada to
Purchase one or more E-books.
The publishers are being required to give up any chance of controlling their ebook prices for a minimum of 18 months, and they also have to forgo the MFN clause for 4 and a half years.
The time periods spelled out in this decree don’t exactly match with the US settlement, though they do come close. In the US the 5 publishers who settled with the DOJ agreed to forgo price controls for 2 years, and the MFN clause for 5 years. Naturally that means that in the US the publishers will be able to start trying to reassert agency control at staggered intervals (with Macmillan last) but in Canada the 4 publishers who settled last week will all be released from the decree at the same time.
By publishing this decree the Competition Bureau has made it clear that agency pricing did not increase competition, as many of Apple’s and the publishers' defenders argued; instead it was quite effective at stifling competition. According to John Pecman, the Commissioner of Competition, "Businesses operating in the digital economy must realize that anti-competitive activity will not be tolerated, whether it occurs in the physical world or the digital one."
P.S. I don’t have information on what Penguin or Random House plan to do with Canadian ebook prices; does anyone know?
image by alexindigo