Amazon to win e-book tussle with Apple

Last updated 10:04 07/11/2012

Relevant offers

Digital Living

Instagram is the worst social network for young people's mental health Google's focus on AI means it will get even deeper into our lives Computer course helping 'digitally disadvantaged' saves ailing mother's family Online retail giants force NZ businesses to implement digital strategies Cyberattack hits at least 200,000 victims in 150 countries British researcher Marcus Hutchins finds kill switch, 'accidentally' stops malware crippling computers worldwide New Zealand upping digital security after 'massive' worldwide cyberattack New Zealand on watch as cyberattack hits 100 countries Kiwis' bedrooms and businesses broadcast online on compromised CCTV cameras Tech advice for parents

European Union regulators are to end a US antitrust probe into e-book prices by accepting an offer by Apple and four publishers to ease price restrictions on Amazon, two sources said on Tuesday.

The decision hands online retailer Amazon victory in its attempt to sell e-books cheaper than its rivals in the fast-growing market that publishers hope will boost revenue and increase customer numbers.

Apple and the publishers offered in September to let retailers set their own prices or discounts for a period of two years, and also to suspend "most-favored nation" contracts for five years.

Such clauses bar Simon & Schuster, News Corp unit HarperCollins, Lagardere SCA's Hachette Livre and Verlagsgruppe Georg von Holtzbrinck, the owner of German company Macmillan, from making deals with rival retailers to sell e-books more cheaply than Apple.

The agreements, which critics say prevent Amazon and other retailers from undercutting Apple's charges, sparked an investigation by the European Commission in December last year.

Pearson Plc's Penguin group, which is also under investigation, did not take part in the offer.

The EU antitrust authority, which in September asked for feedback from rivals and consumers about the proposal, has not asked for more concessions, said one of sources.

"The Commission is likely to accept the offer and announce its decision next month," the source said on Tuesday.

Antoine Colombani, spokesman for competition policy at the European Commission, said: "We have launched a market test in September and our investigation is still ongoing."

Amazon declined to comment, while Apple did not respond to an email for comments.

Companies found guilty of breaching EU rules could be fined up to 10 percent of their global sales, which in Apple's case could reach US$15.6 billion, based on its 2012 fiscal year.


Antitrust regulators tend to frown on restrictions on online trade and the case is a good example of this policy, said Mark Tricker, a partner at Brussels-based law firm Norton Rose.

"This case shows the online world continues to be a major focus for the Commission. They are looking at lots of different aspects of e-commerce, as this can have such a significant impact on consumers, development and innovation," he said.

"These markets change very quickly and if you don't stamp down on potential infringements of competition rules, you can have significant consequences."

UBS analysts estimate that e-books account for about 30 percent of the US book market and 20 percent of sales in Britain but are minuscule elsewhere. Amazon created demand for e-books when it launched its e-Kindle reader, charging US$9.99 for each book.

Ad Feedback

Apple's agency model let publishers set prices in return for a 30 percent cut to the maker of iPhone and iPad.

The US Department of Justice is also investigating e-book prices. HarperCollins, Simon & Schuster and Hachette recently settled, but Apple, Penguin Group and Macmillan continue to fight the allegations.

- Reuters


Special offers

Featured Promotions

Sponsored Content