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Apple probed by EC antitrust arm over ebooks market

Did publishers and Cupertino stifle competition in EU?

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Brussels opened a formal investigation into the sales of ebooks in Europe this morning to determine whether five publishers, with the help of Apple, had breached competition rules within the EU.

In a statement, the European Commission listed News Corp-owned, US-based Harper Collins; France-based Hachette Livre, which is owned by Lagardère Publishing; Pearson Group's Penguin in the UK; CBS-owned, US-based Simon & Schuster; and Germany-based Verlagsgruppe Georg von Holzbrinck, which owns, inter alia, Macmillan.

The opening of proceedings means that the Commission will treat the case as a matter of priority. It does not prejudge the outcome of the investigation.

The Commission will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition in the EU or in the EEA [European Economic Area].

The Commission is also examining the character and terms of the agency agreements entered into by the above named five publishers and retailers for the sale of e-books. The Commission has concerns, that these practices may breach EU antitrust rules that prohibit cartels and restrictive business practices (Article 101 of the Treaty on the Functioning of the European Union – TFEU).

Brussels said it was unable to give a deadline for when the investigation would be completed due to a number of factors, including the complexity of each case.

In March this year, the Commission surprised several premises of various companies that do business in the ebook publishing sector, by arriving unannounced to carry out inspections.

The EC said that the UK's Office of Fair Trading (OFT) had been investigating the matter in parallel with Brussels to probe whether business practices for the sale of ebooks breached competition rules.

In a separate statement, the OFT said:

The OFT has decided to close its investigation into whether arrangements that certain publishers have put in place with some retailers for the sale of e-books may breach competition rules.

This decision has been taken on the grounds of the OFT's administrative priorities, in particular because the OFT believes, following discussions with the European Commission, that the European Commission is currently well placed to arrive at a comprehensive resolution of this matter and will do so as a matter of priority.

The OFT will continue to cooperate closely with the European Commission on this matter to help secure the best outcome for UK consumers.

The OFT may reconsider its decision, in consultation with the European Commission, in the future if it has reasonable grounds to suspect that there is an infringement of competition law, which may have an impact on UK consumers.

The OFT has not reached any view as to whether or not the parties involved have infringed competition law.

Apple and the publishers now under investigation by the antitrust wing of Brussels have been told that proceedings are underway, the EC said. ®

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