UK Examining Publishers’ E-book Pricing For Anti-Trust Breach

The UK’s competition authority says it has opened an investigation “into whether arrangements that certain publishers have put in place with some retailers for the sale of e-books may breach competition rules”, following “a significant number of complaints”.

The Office of Fair Trading does not name the practices nor the complainants or publishers in question, but says it relates to the so-called “agency pricing” model favoured by Apple.

Under this, some publishers have begun setting their own prices for e-book retail, rather than allow online retailers themselves to set prices; the retailers, which become “agents”, make a set percentage “commission” of each sale.

Apple (NSDQ: AAPL) reportedly urged publishers to switch to this model in order to sell through iBooks. Gigaom: “Under the agency model Apple uses, it will take 30 percent of each e-book sale made, while the publisher gets 70 percent of the take to distribute between itself, the author and other involved in the making of the book.” That is much more than publishers conventionally got.

Amazon (NSDQ: AMZN) is on-record as opposing this model. In October, it wrote on its Kindle UK forum that it has “not only frustrated readers, but has caused booksellers, publishers and authors alike to lose sales … In the UK, we will continue to fight against higher prices for e-books”.

Amazon said, when some U.S. publishers (Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster) adopted the model last year, “prices went up on agency-priced books, sales immediately shifted away from agency publishers and towards the rest of our store”. says Hachette adopted in the model in the UK in September, HarperCollins and Penguin in November, Simon & Schuster at year’s end; Macmillan and Canongate have also signed on but have not yet implemented the model.