Culled From the Wall Street Journal
U.K. Begins E-Book Price Probe By PAUL SONNE
The U.K. trade regulator said Tuesday it is investigating antitrust complaints related to digital-book pricing, a move that comes about six months after state authorities in the U.S. began similar probes.
The Office of Fair Trading said in a statement that it began to investigate pricing arrangements between book publishers and digital retailers after receiving "a significant number of complaints." It didn't elaborate on the source of the complaints, and said it is looking to see whether the arrangements breach antitrust rules.
"The investigation is at an early stage and it should not be assumed that the parties involved have breached [antitrust] law," the OFT said in a statement. An OFT spokesman declined to elaborate.
The investigation comes after months of haggling between book publishers and online retailers over pricing for electronic books, sparked by the rise of devices such as Apple Inc.'s iPad and Amazon.com Inc.'s Kindle. Book publishers, having watched music companies falter as Internet distribution cannibalized in-store sales, have moved quickly to protect their business.
That in part has led to the "agency pricing" model, the same system that has come under antitrust scrutiny by attorneys general in Connecticut and Texas.
Under that model, publishers including Pearson PLC's Penguin Group and Lagadère SCA's Hachette unit in the U.K. set their own retail prices, instead of allowing online vendors to set their own sales prices for e-books The online retailers make a set percentage of each sale, under that practice.
A person familiar with the matter said the OFT inquiry focuses on the agency pricing model. In August, then Connecticut Attorney General Richard Blumenthal said such pricing agreements "resulted in uniform prices for most of the popular e-books—potentially depriving consumers of competitive prices."
Texas and Connecticut launched their pricing probes after five publishers adopted an agency pricing model at the urging of Apple and prior to the April release of its iPad.
Unlike other European countries, many of which prevent retailers from selling books at discounted rates under laws meant to protect independent booksellers, the U.K. generally does not regulate the retail prices for books. That makes the British book market similar to that of the U.S.
Penguin, Hachette, News Corp.'s HarperCollins and CBS Corp.'s Simon & Schuster are among the U.K. publishers that follow the agency pricing model. Amazon and Apple did not respond to requests for comment. News Corp. also owns The Wall Street Journal.
Simon & Schuster and Hachette declined to comment. Penguin and HarperCollins confirmed that they are among the publishers being investigated by the OFT.
"The OFT is emphasizing that the investigation is at an early stage and it should not be assumed that the parties involved have breached competition law," a spokeswoman for Penguin said in a statement. "We will cooperate fully with the investigation."
What I am Currently Reading