Publishers investigated over ebooks

EUROPEAN regulators have launched an investigation into some of the biggest names in publishing to discover whether, with the help of Apple, they have flouted competition rules over the pricing of electronic books.

It follows an inquiry in Britain earlier in the year by Office of Fair Trading as regulators clamp down on potential legal breaches in the e-book industry.

The European Commission said it had begun formal antitrust proceedings against publishers including Penguin, HarperCollins and Simon & Schuster. France's Hachette Livre and a German publisher, Verlagsgruppe Georg von Holzbrinck, are also involved.

Surprise inspections of companies working in the digital publishing sector were carried out by the commission in March. The popularity of e-books continues to soar and Apple is desperate to take on Amazon, which is the dominant player in the market with its Kindle electronic reader.

Analysis by Juniper Research this month forecast that e-book sales would hit $3.2bn this year, rising to $9.7bn in 2016. Sales of e-books have overtaken those of paperbacks in the US, according to Amazon.

The EC case focuses on the whether the companies were "engaged in anti-competitive practices affecting the sales of e-books in the European Economic Area, in breach of EU antitrust rules". The watchdog said it would deal with the issue as a matter of priority.

The focus of the investigation, the it added, will be on whether publishers and Apple "have engaged in illegal agreements or practices that would have the object or the effect of restricting competition" in Europe. The OFT closed its case as the Commission had administrative priority.

The terms of the so-called "agency agreements" made by the five publishers with retailers over the sale of e-books will be scrutinised to see whether they have breached cartel laws. Under such an agency agreement, Apple became the first e-bookseller to allow publishers to set prices for their content, while retailers took an agency commission.

Previously, publishers set wholesale prices and shops set the prices paid by customers.

Pearson, which owns Penguin Books, said it "does not believe it has breached any laws, and will continue to fully and openly cooperate with the commission."

Apple declined to comment.

The German group said the allegations were "unfounded," according to the Wall Street Journal, which also reported a Harper Collins statement that it was "co-operating fully with the investigation".

Hachette Livre declined to comment, while Simon & Schuster was unavailable.