Fresh from covering itself with ignominy through Author Solutions, Penguin has promised it will play nice in Europe over pricing, with an offer to the European Union to end the price-fixing practices highlighted by the recent Apple anti-trust case in the US, which the European Commission deemed acceptable last week.
“After our decision of December 2012, the commitments are now legally binding on Apple AAPL +0.57% and all five publishers including Penguin, restoring a competitive environment in the market for e-books,” announced Joaquín Almunia, the European Commission vice president in charge of competition policy.
All the other publishers under investigation, Hachette Livre SA, HarperCollins Publishers Ltd., Holtzbrinck GmbH, and Simon & Schuster Inc., as well as Apple itself, reached agreement with the Commission in December 2012. Penguin made its own peace offering to the EC in April.
“Penguin offered substantially the same commitments as those proposed by the other four publishers and made legally binding on those companies. Today’s decision makes the commitments offered by Penguin legally binding and ends the Commission’s proceedings against this company. It does not conclude on whether EU antitrust rules have been infringed. If a company were to break the commitments made binding upon it, the Commission could impose a fine of up to 10% of the company’s annual worldwide turnover, without having to find an infringement of the antitrust rules.”
Under the terms of the settlement, Penguin has formally committed to end its current agency agreements on e-book pricing as well as dropping certain most-favoured-nation (MFN) clauses in such agreements that prevent other e-book retailers from discounting Penguin e-books below the prices offered by Apple. Penguin also concedes to e-tailers conditional rights to discount its e-books over a two-year period.
Given the huge inroads that self-published e-book sales are now making into the e-book publishing market, it’s questionable whether any price-fixing cartel between major publishers can truly control the marketplace any more. But anti-competitive behavior remains what it is. And Apple’s moral high ground in its appeal against last month’s U.S. federal court ruling that put it at the center of the price-fixing web has been eroded a little bit more.