Apple And Publishers To Settle e-Book Case In Europe

The European Commission has posted some details of a proposed settlement between it and Apple and four publishers over the switch from the wholesale model to the agency model.  The Commission investigated whether this violated competition rules for Europe.  From the Press Release:

The Commission considers at this stage that these companies may have breached EU antitrust rules that prohibit cartels and restrictive practices by jointly switching the sale of e-books from a wholesale model to agency contracts containing the same key terms (in particular an unusual so-called "Most Favoured Nation" – MFN – clause for retail prices). The agency model allows more control by publishers over retail prices. The Commission has concerns that this switch may have been the result of collusion between competing publishers, with the help of Apple, and may have aimed at raising retail prices of e-books in the EEA or preventing the emergence of lower prices.

In the proposed commitments, the five companies offer to terminate existing agency agreements and refrain from adopting price MFN clauses for five years. In case any of the four publishers would enter into new agency agreements, retailers would be free to set the retail price of e-books during a two-year period, provided the aggregate value of price discounts granted by retailers does not exceed the total annual amount of the commissions that the retailer receives from the publisher.

The Wall Street Journal reports on the issue and notes that Apple and Macmillan would rather fight it out in the United States rather than settle:

The offer is notable because Apple and one of those publishers—Macmillan—have refused to sign on to a similar settlement in the U.S., where they are gearing up for a court fight with the government over allegations they colluded to fix prices.

The discrepancy raises the prospect that booksellers in Europe will be allowed to discount books by Macmillan in particular, whereas U.S. retailers will not. Macmillan declined to comment on the reasons for its differing legal approaches.

Those differing legal approaches may be related to the differences between the e-book market in Europe and the United States.  Here are excerpts from the Publisher’s Weekly report The Global eBook Market:  Current Conditions and Future Projections 2011:

Emerging ebook markets outside of the US and the UK are all estimated to currently represent at best 1 percent of the overall book market, making projections of future dynamics of growth extremely difficult. (And China is a different case altogether, with the prominent placement in China of mobile platforms.)

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How the American market picked up speed all of a sudden in fall 2010 to achieve the first double-digit market share in the key segment of bestselling fiction is a lesson to bear in mind for 2012 and 2013 – not for all of Europe, but at least for Germany and France. Yet with both specific factors shaping markets and reading cultures, a simple rerun of the American experience seems rather unlikely. In a global perspective, and with a horizon of the next three to five years, a more complex picture seems more realistic, with a handful of different patterns emerging, some more closely connected to global integration, and others – by cultural separation and through regulations – going digital at a slower pace.

My guess is there wasn’t enough profit in the European e-book market to make a fight with the EU worth the trouble to Apple and the publishers.  The United States, on the other hand….  [MG]