Canadian Competition Bureau Strikes Deal With 4 Publishers, Ends Agency Pricing
With the exception of Apple going through the Nth round of their fight with the DOJ, the agency era is pretty much over with here in the US and it is about to end in Canada as well.
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
Andrew February 11, 2014 um 2:34 pm
Alexander Inglis February 11, 2014 um 3:39 pm
Finally we will get some decent pricing at Kindle and Kobo for some popular fiction.
Kobo Wins Stay of Execution on the End of Agency Pricing in Canada – The Digital Reader September 23, 2014 um 4:07 pm
[…] Kobo just won the first battle in their month-old fight to keep price competition out of the Canadian ebook market. The Canadian Competition Bureau announced on Tuesday that they were delaying the settlement that 4 publishers had agreed to in early February 2014. […]
Kobo: Ending Agency Pricing Will Kill Us – The Digital Reader September 23, 2014 um 5:45 pm
[…] Competition Bureau announced a settlement last month with 4 publishers to end agency pricing, but it looks like the process isn’t going to go as […]
Agency eBook Pricing Will be Alive and Well in Canada Until at Least May 2015 ⋆ The Digital Reader January 20, 2015 um 3:03 pm
[…] you might recall, earlier this year 4 Canadian publishers ( Hachette, HarperCollins, Macmillan, and Simon & Schuster) announced […]
No, the Canadian Competition Bureau ISN'T Investigating Indigo, Kobo on eBook Prices ⋆ The Digital Reader January 20, 2015 um 3:03 pm
[…] February 2014 the CB announced a deal with 4 major publishers Hachette, HarperCollins, Macmillan, and Simon […]
Canada Investigates Apple for Possible eBook Pricing Conspiracy | Ink, Bits, & Pixels July 7, 2015 um 6:13 pm
[…] early last year when four publishers (Hachette, HarperCollins, Macmillan, and Simon & Schuster) agreed to settle with the CCB. The four publishers negotiated a settlement agreement that would allow retailers to discount […]