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December 13, 2012

Apple to Ease Price Restrictions Against Amazon

By Brittany Walters-Bearden, TMCnet Contributor

Apple (News - Alert), in conjunction with four other publishers, have made an offer to the European Union to ease price restrictions against Amazon, in order to put an end to an anti-trust investigation lodged by the European Commission. This resolution is considered to be a positive decision for Amazon in its endeavor to sell e-books cheaper than their chief competitors, and it hopes that this will help increase sales and customer satisfaction. This agreement from Apple has eased the concerns that the European Commission was having that Apple and the publishers were manipulating the prices, in order to limit competition.

Joaquin Almunia, the European Union Competition Commissioner, feels that this is a positive decision for the free market; “The commitments proposed by Apple and the four publishers will restore normal competitive conditions in this new and fast-moving market, to the benefit of the buyers and readers of e-books.”

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The four publishers involved with Apple are: Simon & Schuster,  HarperCollins, Hachette Livre, and Macmillan Publishing. Apple and these four publishers have agreed to let retailers develop their own price structure and defer their “most-favored nation” contracts. These contracts kept Amazon from undermining Apple’s prices, and this is what is thought to have prompted the European Union anti-trust probe last December.

Although still under investigation, Pearson Place’s Penguin publishing group was not part of the agreement reached by Apple and the four other publishers. They elected to make their own offer to the Commission to settle their issues.

Should any of these companies be found violating the agreement made with the European Union, the offender could be fined as much as 10 percent of their global sales; Apple has a projected figure of $15.6 billion in sales this year, so the punishment could be very severe.

This is not the only time these companies have come under investigation for similar tactics. The United States Department of Justice has conducted an investigation much like the European Union. To date, HarperCollins, Simon & Schuster, and Hachette have reached an agreement with the Department of Justice in their cases but Apple, Penguin Group, and Macmillan have not been able to come to an arrangement.

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Edited by Brooke Neuman
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