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EU Commission Starts Antitrust Investigation for Apple, Price Fix Six

The European Union’s antitrust watchdog announced today that they’re looking into whether Apple colluded with publishers to restrict competition for ebooks by tying the hands of retailers.

Five publishers have been named. The probe will focus on potentially anticompetitive practices by Hachette (owned by France’s Lagardere Publishing), HarperCollins (owned by Newscorp), Simon & Schuster (CBS), Penguin (owned by Pearson), and Germany’s Verlagsgruppe Georg von Holtzbrinck (they own Macmillan here in the US).

The name missing from this list is Random House, who was late to the game. They apparently escaped notice because they weren’t one of the original conspirators. or they might get sucked in later in the investigation.

While I like to cheer this on, I’m not sure that anything will come of it. These things take time, and long before this probe concludes I expect the ebook market to change significantly. By the time the EU decides that yes, the publishers did fix the price, I don’t expect it to matter. I don’t expect the pricing dynamic of the major publishers to matter 2 and 3 years down the line.

Of course, from the American viewpoint this investigation is a little funny. I mean, it’s already legal in at least 1 EU member for a publisher to fix the prices of their own books, and that’s probably true for several EU members.

Germany has a law on the books that prevents bookstores from offering too big of a discount. The idea behind the law is that it discourages competition among bookstores and thus make sure that a lot of bookstores stay open, instead of retail giants (think Amazon) undercutting the little guy and driving them out of business. I’ve heard of the German law because Amazon has run afoul. Amazon has tried to offer free shipping, and that’s too much of a discount.

As I see it, there’s a very thin line between one publisher fixing the price and several publishers colluding to fix the price. I’m not sure I see the difference, and to be honest, the goal is the same whether just the single publisher or a group of publishers fixes the price. They want to limit competition so the smaller competitors don’t get squashed.

But one important difference between paper and digital is that ebookstores  don’t offer the same local character of a small bookstore. I can appreciate the desire to maintain many small bookstores, but you don’t get the same value from many small ebookstores. There’s no need to protect them.

While we’re on the topic, there are also a couple similar investigations going on in the US. Last year Connecticut and Texas launched probes into Apple and the Price Fix Six. It’s been a while since I last posted on this, but as of last week the investigations were still in process. I unfortunately cannot tell you anything about the direction they’re taking; no one’s talking.

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fjtorres December 6, 2011 um 4:16 pm

What the Brusselcrats are probing is precisely how much behind the scenes "coordination" Apple conducted, so that the 5 Price Fixers could implement the scam at the same time as they launched iBooks. The idea being that, yes, one Publisher forbidden competition is (questionably) tolerable but five doing it at the same time smacks of cartelization which is definitely a no-no.
As to what will come of it, a good guess is: nothing meaningful.
They’ll tell the BPHs to stop it and hit Apple with a multi-billion euro fine for their role in the scam. Which, the way things are going (with Apple and the euro) will be about a half-hour worth of Apple revenue.

italianEreaader December 6, 2011 um 5:34 pm

Today, Amazon IT started offering a 5euros discount for every 30 euros spent buying (paper) books belonging to a specific Italian publisher. Of course, to avoid legal problems (recent IT law prevents stores from offering more than 15% discount, unless specifically agreed with the publisher) the 5 euros bonus can be spent for everything other than books…. but, pratically, is an additional discount on books! Thanks Amazon, we do need competition in our market.

US Justice Department Now Looking Into the Price Fix Six – The Digital Reader December 7, 2011 um 10:29 pm

[…] this week we learned that the EU was continuing an investigation into Apple and their co-conspirators, and today I can report that the EU isn’t the only govt […]

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