Apple Gives Way on European E-book Pricing

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In a settlement announcement today, the European Union’s competition commission formally accepted the offer from Apple Inc. (NASDAQ: AAPL) and four publishing houses that will substantially change the rules under which Apple and the publishers were able to restrict online selling prices for books. This is particularly good news for Amazon.com Inc. (NASDAQ: AMZN)

In a similar case this past September, a U.S. court accepted a settlement with three publishers that allows Amazon to set its own price for e-books (called the “wholesale” model) and struck down the publishers’ preferred “agency” model, under which the publisher set the price and Apple was given a 30% cut of the set price.

The EU settlement re-establishes the wholesale model for two years and prohibits for five years the publishers from forcing rival retailers to sell e-books at Apple prices. EU competition commissioner Joaquin Almunia said:

The commitments proposed by Apple and the four publishers will restore normal competitive conditions in this new and fast-moving market, to the benefit of the buyers and readers of e-books.

Apple, Penguin Group, and Macmillan did not join the U.S. settlement in September and that trial is set to begin early next year.

Paul Ausick

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