BRUSSELS--U.K. publisher Penguin, owned by Pearson PLC
(PSON.LN), has made a satisfactory offer to the European Union's
antitrust watchdog after its investigation into distorted pricing
of electronic books in Europe, the European Commission said
Thursday.
"After our decision of December 2012, the commitments are now
legally binding on Apple and all five publishers including Penguin,
restoring a competitive environment in the market for e-books,"
Joaquin Almunia, commission vice-president in charge of competition
policy, said in a statement.
Penguin was the final publishing company to reach a settlement
with the EU's antitrust watchdog in its investigation of e-book
price collusion with Apple Inc. (AAPL). The other publishers in the
probe, and Apple itself, settled with Brussels last December.
Formal proceedings began late 2011, alleging that Apple and five
publishers had illegally colluded to fix the price of e-books ahead
of Apple's first iPad launch in 2010.
Penguin's proposals were "substantially the same" as those
previously accepted from Simon & Schuster Inc., HarperCollins
Publishers Ltd., Hachette Livre SA and Holtzbrinck GmbH, and were
made legally binding by the commission in December 2012, it said.
HarperCollins is a division of News Corp. (NWS), the publisher of
the Wall Street Journal.
The investigation was based on e-book pricing. Before Apple
launched the iPad, publishers would set a wholesale price and a
suggested higher cover price for e-books, which retailers could
then discount. But then Amazon.com Inc. announced heavy price cuts
on best sellers to promote its rival Kindle e-reader.
Apple offered publishers a new way to price their books that
allowed them to set the final e-book price themselves and give
Apple a 30% cut for selling the books through its iBookstore. The
five publishers signed on with Apple and then imposed a new sales
process on Amazon, effectively banning it from discounting.
The commitments made by Penguin include, in particular, the
termination of on-going agency agreements and the exclusion of
certain most-favoured-nation (MFN) clauses in Penguin's agency
agreements during the next five years. Penguin also offered to give
retailers freedom to discount e-books, subject to certain
conditions, during two years
The U.S. Justice Department settled a similar case with the
publishers, including Penguin in the U.S., in December.
Write to Frances Robinson at frances.robinson@dowjones.com
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