The European Commission has formally launched an antitrust investigation against Apple and book publishers Hachette Libre, Harper Collins, Simon & Schuster, Penguin and Holtzbrinck, the German owner of Macmillan. The commission is looking into the possibility that Apple conspired with these publishers to restrict competition in the e-book market in the European Union.
This isn't the first time Apple and the publishers have been targeted for alleged price fixing. The agency model, what the move is known as, is the subject of a class-action lawsuit was filed this summer, claiming that the group worked together to raise e-book prices.
As GigaOM notes, the investigation excludes Random House, Amazon and Google.
Read the entire press release below.
Brussels, 06 December 2011 - The European Commission has opened formal antitrust proceedings to investigate whether international publishers Hachette Livre (Lagardère Publishing, France), Harper Collins (News Corp., USA), Simon & Schuster (CBS Corp., USA), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany) have, possibly with the help of Apple, engaged in anti-competitive practices affecting the sale of e-books in the European Economic Area (EEA)1, in breach of EU antitrust rules. The opening of proceedings means that the Commission will treat the case as a matter of priority. It does not prejudge the outcome of the investigation.
The Commission will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition in the EU or in the EEA. The Commission is also examining the character and terms of the agency agreements entered into by the above named five publishers and retailers 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 (Article 101 of the Treaty on the Functioning of the European Union – TFEU).
The duration of antitrust investigations depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned cooperate with the Commission and the exercise of the rights of defence.
Background on the ebooks investigation
In March 2011, the Commission carried out unannounced inspections at the premises of several companies active in the e-book publishing sector in several Member States (see MEMO/11/126).
To date, the Commission and the UK Office of Fair Trading have investigated in parallel and in close cooperation whether arrangements for the sale of e-books may breach competition rules. Before the Commission opened formal proceedings, the OFT had closed its investigation on grounds of administrative priority. The OFT has made a substantial contribution to the ebooks investigation and will continue to co-operate closely with the Commission going forward.
Background on antitrust investigations
Article 101 of the TFEU prohibits agreements and concerted practices which may affect trade and prevent or restrict competition. The implementation of this provision is defined in the Antitrust Regulation (Council Regulation No 1/2003) which can be applied by the Commission and by the national competition authorities of EU Member States.
The legal base for the Commission's opening of formal proceedings is Article 11(6) of the Antitrust Regulation (Council Regulation No 1/2003).
Article 11(6) of the Antitrust Regulation provides that the initiation of proceedings by the Commission relieves the competition authorities of the Member States of their competence to also apply EU competition rules to the practices concerned. Article 16(1) further provides that national courts must avoid giving decisions, which would conflict with a decision contemplated by the Commission in proceedings that it has initiated.
The Commission has informed the companies and the competition authorities of the Member States that it has opened proceedings in this case.