Europe probes Apple’s e-book deal with publishers

European antitrust regulators have announced the launch of a formal investigation into the relationship between Apple and five of the world’s largest publishers, in a move that could reshape the digital book market.

In a statement, the European Commission said that it was looking into Apple’s deals with Simon & Schuster, HarperCollins, Hachette Livre, Penguin and Holtzbrinck over the question of whether they have colluded to keep other players out of the e-book market, fix prices or unfairly restrict competition.

The Commission will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition in the EU or in the EEA.

The Commission is also examining the character and terms of the agency agreements entered into by the above named five publishers and retailers for the sale of e-books. The Commission has concerns, that these practices may breach EU antitrust rules that prohibit cartels and restrictive business practices.

News of the formal investigation might be new, but the claims are not. Earlier this year antitrust officials conducted raids on the offices of the companies involved, and there have been several lawsuits and legal challenges to Apple’s relationship with publishers in the U.S., as Mathew wrote over the summer.

The heart of the allegations against the various companies is that they may have conspired to fix prices through agreements around the so-called “agency model.” The EU is investigating whether this meant that the group was acting as a cartel or unfairly shaping the market for e-books. There is no doubt that publishers were desperate to try to keep prices for digital books up while¬†under constant pressure from Amazon to drop them: The question is whether breaking that relationship involved breaking the law. They deny that anything untoward happened.

But notable by their absence are some of the other major players in this space: technology companies like Amazon and Google, as well as publishing houses like Macmillan and Random House.

That alone makes this picture much more complicated, which is one reason it has escalated to pan-European level (until now, Britain’s Office of Fair Trading had been conducting its own separate investigation into these claims, but it has closed down its operation, as the European inquiry takes jurisdiction).

There is no formal deadline for completion of the investigation.