* To allow other retailers sell e-books more cheaply
* Offer is for two years
* No "most favoured nation" clauses for 5 years
* Third parties have a month to comment on the proposals
* No fines for Apple, publishers if EU regulators accept
By Foo Yun Chee
BRUSSELS, Sept 19 Apple Inc and four
major publishers have offered to let retailers such as
Amazon.Com Inc sell e-books at a discount to settle an
EU antitrust investigation into their pricing deals and avoid
The case highlights the battle between retailers and
publishers over pricing control as publishers look to e-books to
boost revenues, cut costs and reach bigger audiences.
EU regulators have been investigating Apple's e-book pricing
deals with Simon & Schuster, News Corp unit
HarperCollins, French group Lagardere SCA's Hachette
Livre, Verlagsgruppe Georg von Holtzbrinck, which owns Macmillan
in Germany, and Pearson Plc's Penguin group.
Apple and the publishers, with the exception of Penguin,
have offered to settle with the European Commission, which began
its inquiry last December. The EU watchdog detailed the offer on
Wednesday, confirming a Reuters report on Aug.
"For a period of two years, the four publishers will not
restrict, limit or impede e-book retailers' ability to set,
alter or reduce retail prices for e-books and/or to offer
discounts or promotions," the Commission said in its Official
It said the publishers and Apple also proposed to suspend
"most-favoured nation" contracts for five years. The clauses
barred publishers from making deals with rival retailers to sell
e-books at prices lower than those set by Apple.
The EU watchdog said third parties have a month to provide
feedback on the proposals. If the response is positive, the
Commission will end its investigation without an infringement
Amazon, which makes the Kindle e-reader and had long sold
e-books for as little as $9.99, declined to comment.
If the offer were to be accepted, it would mean the
publishers getting off relatively lightly, said Mario Todino, a
partner at Brussels-based law firm Gianni, Origoni, Grippo,
Cappelli & Partners.
"The commitments are quite extensive and will more or less
address the issues. However, the absence of a fine shows the
Commission being quite lenient, as the alleged infringements
could be considered hard-core," Todino said.
"The lenient stand could be the Commission taking into
account two elements, the relatively new e-book distribution
model and the market power of a major retailer," he said.
HarperCollins, Simon & Schuster and Hachette reached a
settlement with the U.S. government in April with similar
Joseph Wayland, the U.S. Justice Department's acting
antitrust chief, said that the department was in touch with
Apple and the book publishers as part of litigation but declined
to say if settlement talks were underway.
Asked about the settlement offer made to Europe, Wayland
said, "What that means for us, I don't know."
Publishers switched to the agency model with Apple in 2010,
under which they set the price of e-books and Apple took a 30
percent cut. The wholesale model favoured by Amazon and other
sellers gave retailers pricing power.
According to analysts at UBS, e-books account for about 30
percent of the U.S. book market and 20 percent of sales in
Britain, but are still negligible elsewhere.
The Commission said it was continuing its investigation into
Penguin. The company is also fighting the U.S. regulators.