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September 21, 2012

Apple, publishers reach tentative deal to settle EU E-Book anti trust case

Move resolves antitrust lawsuit by the European Commission

By CBR Staff Writer

European Commission said it was ready to discontinue its e-book price fixing investigation against Apple and four other European pulishers after the companies agreed to allow online retailers like Amazon sell e-books at a discount for two years.

Apple and four major publishers have already announced to let retailers including Amazon.Com to sell e-books at a discounted price, in a bid to resolve an antitrust lawsuit and avert probable fines.

The commission seeks comment from affected businesses over the next month on the proposal before going ahead with the plan.

The settlement would end the European Commission’s nine-month antitrust inquiry into Apple and the publishers which include Simon & Schuster, Harper Collins, Hachette, Holtzbrinck.

The proposal would allow the retailers reduce the prices of e-book prices, while offering support for a period of about two years.

EU said in a statement that for a period of two years, the Four Publishers will not restrict, limit or impede e-book retailers’ ability to set, alter or reduce retail prices for e-books and/or to offer discounts or promotions.

"However, as regards agency agreements, the aggregate value of the price discounts or promotions offered by any retailer should not exceed the aggregate amount equal to the total commissions the publisher pays to that retailer over a 12-month period in connection with the sale of its e-books to consumers," EU said.

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All the four publishers and Apple will conclude the agency agreements for selling e-books in the EEA completed between each of the Four Publishers and Apple.

The Commission also revealed that the publishers and Apple will not enter into most-favored nation contracts five years which had effectively banned publishers from selling e-books at prices lower than the price set by the iPhone maker.

Further, each retailer other than Apple will be allowed to conclude any agency agreements concluded for the sale of e-books which will restrict, limit or impede the retailer’s capability to set, change or cut the retail price.

Publishers had transformed to the model adapted by EU with Apple in 2010, which allowed them to set the price of e-books, with 30%stake obtained by Apple.

In 2010, Apple offered publishers a new model of pricing their books, which allowed publishers to set the final price themselves and Apple would take a 30% cut for the sale of books in its iBookstore.

Further, a similar agency model was imposed on Amazon, which had effectively banned it from discounting the price of e-books.

In, April 2012 the Justice Department filed an antitrust claim against Apple and five publishers, condemning them of collaborating to increase the price of e-books, while three of the publishers including Hachette, HarperCollins and Simon & Schuster agreed to resolve the case with no admitting offence.

Further, following the approval from the US court on 06 September 2012, Amazon was allowed to offer discounts on some of the publishers’ titles with immediate effect.

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