Anti-Trust authorities based out of the EU have raided several major publishers on the premise of price fixing and artificially inflating the prices. Accusations abound that several publishing companies are getting together under the cartel model to agree on industry standard price fixing.
The European Commission admitted to the Associated Press that it had “reason to believe that the companies concerned may have violated EU anti-trust rules that prohibit cartels and other restrictive business practices.” Although no one was arrested, companies were fined and we see the authorities’ actions are a precursor to a larger scale investigation.
These actions originally started with complaints to the British Office of Fair Trade or the OFT. Industry insiders and general interested parties proclaimed that under the new Agency model being adapted by major publishers in determining global eBook prices, violates anti-trust and anti-competitive laws. Some have gone so far to claim that the publishers have formed a shady cartel to price fix ebooks. This behavior is illegal in Europe and promotes avoidance of competition and makes it harder for newcomers to enter the market.
Officially the EU Officials have not publicly divulged the names of the companies involved in the raid. When pressed for comment they have admitted they do not have much proof and are at the very beginning of a formal investigation. Although the authorities never released any names, UK based publishers HarperCollins and Penguin admitted that they were not approached during the raid last week.
So it seems not a whole lot of action was happening to the major publishing houses in the United Kingdom, but a lot of action was happening in France. Companies such as Gallimard, Hachette Livre, Flammarion and La Martinière have also confirmed the raids transpired at their offices, and in some cases said they occurred over a period of a few days. Many of the companies involved all said the the authorities did not give them any information on why the raids were being conducted.
Companies in France were the major targets of the ongoing investigation with no end in site. This is mainly because most of the companies just got into eBooks and have temporarily adopted the agency model for eBooks to determine set prices until something more official is produced. Currently the country abides by the “Lang Law” for tangible books. The law establishes a fixed price for books sold in France and limiting discounts on them. It basically lets the publisher determine the price and print it on the back of the book and Booksellers are not allowed to sell a book for a discount of more than 5% below the publisher’s price. This law only applies to physical books whereas eBooks do not really fall into the spectrum of the original premise of it.
So it seems right now the EU officials are targeting smaller publishing houses to build a case against the entire eBook Agency model. In many editorial comments in the UK based Guardian Newspaper, people see the agency model or Cartel, as “an old boys club” or “the publishing variant of the Bilderberg Group.” Whatever the case may be, targeting the smaller fish first will build better cases to attack the larger publishing companies in the future.