As the Euro Burns, the European Commission Investigates Agency eBook Pricing

PublishersLunch

As the European Union wrestles with its very financial foundations, their antitrust agency the European Commission is focusing on the essential issue: It will formally investigate whether the original Agency Five and Apple "have engaged in illegal agreements or practices that would have the object or the effect of restricting competition in the European Union or in the European Economic Area." The Commission says it is "examining the character and terms of the agency agreements entered into...for the sale of e-books. The Commission has concerns that these practices may breach EU antitrust rules that prohibit cartels and restrictive business practices." The move is an expansion of the commission's initial inquiry, which began in March.

The Commission says they will "treat the case as a matter of priority" while underscoring that the announcement "does not prejudge the outcome of the investigation." But, as Reuters points out, EU Competition Commissioner Joaquin Almunia raised concerns recently about "artificial restrictions imposed by some companies to cross-border trade" and mentioned the distribution of ebooks in particular.

It's all a bit confusing to the American mind, since many individual European nations require fixed pricing and/or ban discounts on printed books and--as recent stories in the WSJ and NYT have underscored--the biggest current impediment to competitive ebook pricing in Europe is the higher VAT levied on digital books as compared to print books.

In statements commenting on the investigation, Pearson said it "does not believe it has breached any laws, and will continue to fully and openly cooperate with the Commission," and HarperCollins said they, too, are "cooperating fully."

In a coordinated move, the UK's Office of Fair Trading has dropped their parallel inquiry in agency ebook pricing, giving way to the European Commission "on grounds of administrative priority." The EC says the UK office "has made a substantial contribution to the ebooks investigation and will continue to co-operate closely with the Commission going forward."