European Commission opens formal investigation into eBooks

On 6 December 2011, the European Commission announced that it has opened a formal investigation into whether a number of international eBook publishers have infringed competition law through their agency arrangements. The companies involved are Hachette Livre, Harper Collins, Simon & Schuster, Penguin and Verlagsgruppe Georg von Holzbrinck. The Commission has also indicated that it suspects that Apple may have played a part in facilitating the arrangements in question.

The announcement comes on the same day that the UK’s Office of Fair Trading officially closed its own eBook investigation, without giving any indication as to its preliminary findings. The OFT began its investigation in February 2011 having received numerous complaints about agreements concluded between publishers and retailers, and was specifically examining whether the agency model of eBook distribution may have involved anti-competitive price fixing.

The OFT investigates cases on the basis of its “prioritisation principles”, and it is thought that the progress of the Commission’s own investigation has led the OFT to decide to focus its attention elsewhere. The OFT has stated that it considers the Commission to be better placed to arrive at a comprehensive resolution, which may indicate that the Commission views this as an issue affecting cross-border trade between EU member states. However, any Commission decision would also take into account any anti-competitive effects felt by UK consumers.

The competition authorities have closely collaborated in their investigations since the Commission carried out unannounced inspections in the sector in March this year, and it is thought that the OFT will continue to assist the Commission going forward. A similar inquiry is also underway in the US, and it is likely that the Commission will exchange information with US regulators in order to progress their investigations.

Companies active in the sector can expect further information requests from the authorities in the coming months, and should review any agreements they have in place with any of the companies under investigation or which may otherwise be vulnerable to challenge under competition law. If the arrangements are found to be anti-competitive, the agreements could be deemed unenforceable and the companies involved can be fined up to 10% of their group’s global turnover.  

If you should require any assistance in connection with this process or would like any further information, please do not hesitate to contact Robert Vidal, Louisa Penny, or Richard Craig.

Lawyers Robert Vidal, Louisa Penny, Richard Craig