Apple Inc. (NASDAQ:AAPL) and four e-book publishers, who are facing an antitrust lawsuit from the U.S. Department of Justice, have combined to make an offer in a similar case being waged in Europe. The offer is essentially framed as a settlement of the case to end the current inquiry and possible heavy fines for anti-competition measures in the EU.
Apple Inc. (NASDAQ:AAPL) along with four publishers – known in America as Simon & Schuster, HarperCollins, Hatchette and Macmillan – are accused by the European Union to depress competition in the e-book market by setting a price for e-books for sale in Apple’s iTunes Store and not allowing other retailers – like Amazon.com Inc. (NASDAQ:AMZN) – from selling those items at a lower price. This is called the “agency model” of pricing, which Apple is accused of convincing the four publishers to adopt in 2010 – a model whereby the publishers set the price of the e-book to be sold. This is counter to the “wholesale model,” which allows retailers to set the selling price.
As a proposed deal with the marketplace, Apple Inc. (NASDAQ:AAPL) and the four publishers have agreed to allow other retailers – like Amazon.com Inc. (NASDAQ:AMZN), market leader in e-book sales – to sell e-books at a discount for two years. EU antitrust investigators are reaching out for industry comment on the proposal and would expect to run a formal market test before deciding to drop the investigation and any charges.
Penguin Books is also mentioned in the antitrust investigation, but it has not submitted any proposals nor was on record supporting the current one.
Apple Inc. (NASDAQ:AAPL) was a little late into the e-book market, as Amazon.com Inc. (NASDAQ:AMZN) introduced its Kindle e-book reader and starting selling its versions of e-books for $9.99 each, immediately taking a dominant stand in the marketplace. The DOJ in the U.S. has filed a lawsuit against Apple and the publishers for similar antitrust violations, though Apple denies the charges and claims the lawsuit only came about because Amazon was losing market share in e-books. Apple denies colluding with the publishers to artificially set prices in the U.S.