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Amazon beats Apple with EU backing to offer cheaper e-books
An EU antitrust investigation looks like it will end with a concession from Apple and four major publishers that will allow Amazon to undercut them on e-book prices. Two sources told Reuters that the European Union regulators will probably accept the offer on the table which will allow retailers to set prices or discounts for the next two years and suspend “most-favored nation” contracts for a period of five years.
Assuming the deal goes through, then the EU will discontinue its antitrust investigation into deals between Apple and publishers that allowed Apple to sell e-books through iTunes at discounted prices which were exclusive. So Apple had basically set up a deal that would prevent anyone from undercutting it. The publishers in the pact were Simon & Schuster, HarperCollins, Hachette Livre, and Macmillan.
The European Commission started investigating in December last year and the sources think that the current offer will be accepted without any additional concessions. It’s not a huge surprise that Apple and the publishers involved have made an offer to try and avoid further court battles, apparently if found guilty of breaching EU rules companies can be fined up to 10 percent of their global sales. That would be a hefty chunk of change in Apple’s case, something like $15.6 billion for 2012.
The U.S. Department of Justice has also been investigating e-book prices and while a few publishers have settled, Apple has not. Part of the settlement there dictated that e-books must not be sold at a loss, but it’s not clear if the EU deal will have the same stipulation.
Neither Amazon nor Apple has commented on this yet. No doubt both companies are waiting for an official decision to be made public, but you can bet Amazon is happy and Apple is not.