The Commission has accepted the legally binding commitments offered by four publishers and Apple for sale of e-books. The Commission was concerned that the restrictive clauses in the publishers’ agency agreements with Apple limited price competition in e-books by leading to a joint switch from the wholesale model to an agency model with similar terms across the industry. The Commission considered that the switch may have been a coordinated action between the publishers and Apple, aimed at reducing competition in retailing e-books. The Commission doubted that the publishers’ agency agreements with Apple were genuine bi-lateral agency contracts as they had the same key terms relating to pricing such as inclusion of a Most Favoured Nation (MFN) clause, retail price grids and the 30% commission rate for Apple.
In their commitments the parties agreed to terminate their existing agency agreements with retail price restrictions (including MFN) and committed not to enter into new agreements on e-books involving MFN clauses relating to prices for five years. These and other commitments are similar to those given by three publishers in their settlement with the Department of Justice in a parallel case in the US.
A team advised Harper Collins in the investigation initially launched by the OFT in the UK, and subsequently before the European Commission. CRA also advised Harper Collins in the US. See the EC’s press release for further details.