Boston, MA 04/22/2013 (wallstreetpr) – Pearson plc (LON:PSON) (Closed:1118.51 GBX, Down by 0.04%)’s Penguin is wiling to make changes in its pricing for digital books as it seeks to settle the EU anti-trust investigation into whether competition had been blocked by them. The proposed changes have been published in the European Union’s official journal. According to that information, for two years, the publisher will not limit, impede or restrict discounts put up by other e-book retailers or their ability to reduce, alter or set e-book prices. The EU has been coming down hard on companies who try to affect competition in the region.
Apple and the publishers
The world’s largest technology company, Apple Inc (NASDAQ:AAPL) (Closed:$390.53, down by 0.39%) as well as four publishers had earlier offered similar solutions to assuage European concerns. The EU said that Apple, four other publishers and Penguin might have breached anti-trust rules that had been outlined by them. After facing EU pressure last year, Apple had promised to annul agency agreements with CBS Corporation (NYSE:CBS) (Closed: $46.06, Up by 0.32%)’s Simon & Schuster, HarperCollins, owned by News Corp, Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan unit, Hachette Livre, owned by Legardere SCA and Pearson. Under the pricing strategy set by Apple, the company takes out a fixed percentage from the e-book prices that have been set by publishers.
In a statement, the Brussels-based commission said that in effect, the rules set by them prohibit restrictive practices and cartels. This is done by swapping the wholesale model sale of e-books to agency contracts, though the key terms for both will be identical.
The European Commission said that these companies may have engaged in practices such as these with the primary objective of blocking any lower pricing that exists in Europe or raising the retail prices of e-books. The competitors and customers have been given a deadline of May 19 before which they will have to comment on the remedies that have been proposed. Once this procedure reaches completion, these would become legally binding via a settlement. It would also mean that the investigation would then be quelled without a fine being imposed. No attempt would be made to determine whether any competition rules had been violated by the companies.
In October, the Random House publishing unit owned by Bertelsmann SE had agreed to a merger with Pearson’s penguin. The combined company will be the largest book publisher in the United States and the U.K. This Joint venture will go by the name of Penguin Random House and is slated to be based in New York. Bertelsmann will own 53 percent while the remainder will be held by Pearson.
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