Penguin Appeases European Union Regulators by Abandoning E-Book Deal with Apple
The European Commission recently announced that it has reached an agreement with book publisher Penguin, resulting in the antitrust probe against the company ending. The EU’s legislative arm officially approved the conditions it and Penguin reached earlier. As part of the terms of those conditions, Penguin won’t make any agreements that would allow it, and not a retailer, to set prices on titles.
This agreement brings to an end the so-called “most favored nation” pricing agreement that Penguin had with Apple, which allowed the publishers to set content pricing as long as it didn’t sell said content to another retailer for less. Previously, major book publishers and Apple had agreed to an “agency model” of pricing when the iPad with iBooks debuted. This was a change from the “wholesale model” they had before with book sellers such as Amazon, which were allowed to resell e-books at or below cost.
Apple’s e-books deals found the company under fire in both the U.S. and in Europe. Both Apple and the accused publishers outside of Penguin reached a settlement in Europe in December, but Apple fought an antitrust suit from the U.S. Department of Justice in its home country. Apple unfortunately lost that case, as a judge found that Apple had conspired with book publishers to raise the price of e-books. The Cupertino California company has appealed the decision but if the ruling stands, it is being speculated that Apple could pay nearly $500 million in damages. We’ll have to wait and see.