Publishing Houses Suspected of E-book Price Fixing

A number of French publishing giants were on Tuesday the target of a series of European Commission anti-trust inspections searching for evidence the companies were colluding to fix prices on e-books.

Competition inspectors descended upon Hachette, Gallimard, Albin Michel and Flammarion, according to a report on a French tech news site, going through records on the computers and mobile phones of company officials. Of the four, just Hachette has confirmed the raids.

Publishers fear the loss-leading sales of e-books will undermine the cost of print publications (Photo: Flickr.com)
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The raids were part of a swoop of publishers in “several” member states, although the commission is being tight-lipped about who else has been targetted.

Germany’s Bertelsmann, owner of Random House, the largest English language publisher in the world, told this website it had not received any visits from commission inspectors.

The commission said in a statement that it “has reason to believe that the companies concerned may have violated EU antitrust rules that prohibit cartels and other restrictive business practices.”

Brussels is not saying how long the investigation will take, but Amelia Torres, the EU executive’s competition spokeswoman, said that the commission is “working closely” with the UK’s Office of Fair Trading, its domestic counterpart, who also is investigating price-fixing in the e-book market.

“We have suspicions of collusion to keep prices high, but I want to stress these are only suspicions and not conclusive proof,” she told EUobserver.

“If our suspicions prove to be founded, this would have an impact across the EU, not just in the countries concerned because e-books are sold across borders.”

“Of course, we may come back empty handed, but if we come back with hard evidence, there is the possibility of fines if we feel they are justified.”

She added that while a number of reports have made mention of national laws permitting the setting of retail prices of print books by publishers, a practice known as ‘resale price maintenance’, this was not the focus of the raids.

“A minority of countries have resale price maintenance laws such as France and Germany that date back to before the nineties, before the development of internet sales and certainly before the advent of e-books,” she continued. “But we are investigating the behaviour of companies not the laws of any particular country.”

It is thought rather that the commission is interested in ‘agency-model’ pricing in the very young sector.

Under agency pricing, the retailer works as an agent for the publisher, who sets the price of the product. Instead of buying the books as in the traditional model, and then being able to price them how they wish, the retailer – in this case a website such as Amazon – acts as an agent who takes a commission.

Publishers prefer this system in order to protect against loss-leading sales of e-books that they say damages the perceived value of books, a development that will undermine the cost of print publications and in the long run will destroy their business model and their ability to fund the sourcing of authors, editing, publishing and translating works.

Agency-model pricing however is not permitted for physical books