Apple, publishers offer antitrust concessions in e-books case

Apple and four major publishers have offered to allow retailers such as Amazon to sell e-books at a discount for two years in a bid to end an EU antitrust investigation and stave off possible fines, a person familiar with the matter said on Friday.

The EU antitrust watchdog opened an investigation into Apple's e-book pricing deals with the publishers last December, saying these may hamper competition in Europe.

The four publishers are Simon & Schuster, News Corp unit HarperCollins, French group Lagardere SCA's Hachette Livre and Verlagsgruppe Georg von Holtzbrinck, which owns Macmillan in Germany.

The publishers have agreed deals with Apple under which online versions of their books sell for set prices on Apple's iTunes, with Apple taking 30 percent of the proceeds. The deals specified that other retailers, such as Amazon, could not sell the e-books at a lower price.

The Commission said in April that the five companies had offered concessions in a bid to end the investigation and avert penalties which could reach 10 percent of their global turnover, but it did not give details.

Pearson Plc's Penguin group, which is also being investigated, was not mentioned among those submitting proposals.

The Commission was now sounding out opinions from the industry as to whether the concessions are sufficient, the person familiar with the matter said, before a formal market test which could lead to the investigation being dropped.

"The Commission is market testing the commitments on an informal basis," the source said.

Apple, Amazon and Verlagsgruppe Georg von Holtzbrinck declined to comment.

The proposals are similar to the ones reached in a settlement in April of a price-fixing lawsuit brought by the U.S. government against HarperCollins, Simon & Schuster and Hachette, which also had sales deals with Apple.

Apple persuaded publishers to adopt an "agency model" in 2010 under which they set the price of e-books and Apple took a 30 percent cut.

The move upended the "wholesale model" in which retailers pay for a product and charge what they like. Amazon, which got a headstart in the e-book market with its Kindle e-reader, had used this model generally to charge $9.99 for its e-books and to dominate the market.

Copyright Thomson Reuters 2012