Publishers Lunch
As expected, the three US Settlers (Harper,
Hachette and Simon & Schuster), along with Macmillan and Apple, have
settled the EU investigation into ebook pricing as previously negotiated. The
European Commission has formally "accepted the legally binding
commitments" from the settling parties.
Their announcement provides a lengthy way
of saying that the EC has accepted the same basic settlement that was
laboriously negotiated with the US Department of Justice (without ever actually
mentioning the US case).
Though Penguin has not settled with the EC,
the new announcement says that position may change--not a big surprise, since
settlements in both Europe and the US are considered by outsiders to be a
necessary prerequisite as part of the review of the proposed Penguin Random
House merger. "Penguin first chose not to offer commitments. However, the
Commission is currently engaged in constructive discussions with Penguin on
possible commitments. If these discussions bear fruit, they would allow an
early closure of proceedings also against that publisher." In the meantime,
as part of Apple's "commitments," they will terminate their existing
ebook sales agreement with Penguin, to be replaced by a new contract with no
most favored nations clause on pricing.
As we have pointed out before, one of the
most important aspects of the European settlement is repeated at the very end
of their announcement: "It is also worth mentioning that this decision
does not relate to national retail price maintenance laws." So in
countries such as Germany and France, two of the three largest ebook markets in
Europe, the settlement has little or no effect, since discounting of books and
ebooks is not allowed anyway.
In the US, the Department of Justice was
quite clear in declaring its view that agency pricing by itself is legal; it
was the alleged collusion in moving to that model to which DOJ objected.
But the EC is a little vaguer on the larger
issue: "The Commission does not take issue with the use of agency
agreements as such or the use of a specific business model, if the relevant
agreements and business practices comply with EU law." The latter phrase
is the key, and "the decision does not take a position on the
compatibility of the parties' agency agreements with EU antitrust rules as
such." Instead, they suggest the legality of agency depends on the
particular circumstances. "The compliance of any new agency agreement,
generally speaking, with Article 101 TFEU is likely to require a case-by-case
assessment."
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