Apple settles with EU on ebook probe

13 Dec 2012
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Apple's EU settlement lets Amazon set ebook prices

European Union regulators ended an antitrust probe into ebook prices, accepting an offer by Apple and four publishers to ease pricing restrictions on Amazon and other retailers.

The decision hands online retailer Amazon a victory in its attempt to sell ebooks cheaper than rivals in a fast-growing market publishers hope will boost revenue and customer numbers.

The European Commission said the concessions from Apple and the publishers soothed concerns that their pricing deals curbed competition.

"The commitments proposed by Apple and the four publishers will restore normal competitive conditions in this new and fast-moving market, to the benefit of the buyers and readers of ebooks," EU Competition Commissioner Joaquin Almunia said.

Apple and the publishers offered to let retailers set prices or discounts for a period of two years, and also to suspend "most-favored nation" contracts for five years.

Such clauses bar publishers Simon & Schuster, HarperCollins, Hachette Livre and Verlagsgruppe Georg von Holtzbrinck, the owner of German company Macmillan, from making deals with rival retailers to sell ebooks more cheaply than Apple.

The agreements, which critics say prevent Amazon and other retailers from undercutting Apple's charges, led to the EU antitrust investigation in December last year.

Pearson's Penguin group, which is also under investigation, was not part of the settlement. The Commission said Penguin had offered concessions expected to resolve the matter with the competition authorities.

Companies found guilty of infringing EU rules can be fined up to 10% of their global sales, which in Apple's case could reach $15.6 billion, based on its 2012 fiscal year.

UBS analysts estimate ebooks account for about 30% of the US book market and 20% of sales in Britain but are minuscule elsewhere.

According to Albert Greco, a professor at Fordham University, Amazon's share of the US ebook market reaches 65%, ahead of Barnes & Noble's 27% share.

HarperCollins, Simon & Schuster and Hachette have settled with the US Department of Justice in a similar investigation but Apple, Penguin Group and Macmillan have not.

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