February 2, 2011, 10:37 AM

U.K. launches an investigation into e-book prices

The targets reportedly include Amazon and Apple.

Thad Rueter

Senior Editor

Lead Photo

The U.K.’s Office of Fair Trading has launched an antitrust investigation into prices charged for e-books. The agency did not identify the companies it was looking at, but they reportedly include Amazon.com Inc. and Apple Inc.

In a statement, the agency, which focuses on consumer protection and economic competition, said that it had received a "significant number of complaints" about e-book pricing. The agency said the investigation remained in the early stages, and that the office is not ready to make any official accusations against specific companies. The agency offered no details about the complaints.

At least two U.S. states have launched similar investigations. In August, Connecticut attorney general Richard Blumenthal said he was looking into whether pricing deals that five U.S. book publishers made with Amazon.com, No 1 in the Internet Retailer Top 500 Guide, and Apple, No. 4, restricted competition for digital book sales. The attorney general of Texas announced a similar investigation in June.

Both Amazon and Apple have struck deals with publishers to sell books for a 30% commission, a setup known in the publishing world as the agency model of pricing. This allows publishers to lower prices when demand decreases, but more often price e-books above the $9.99 price point that Amazon sets for many bestsellers, a price that publishers fear devalues their printed volumes. The alternative is for retailers to buy books from publishers, typically for a discount of at least 50% off list price, and then set their own prices.

The Office of Fair Trading declines to say whether its investigation was sparked by the U.S. probes, and an agency spokesman would give no further comment. The statement from the agency says it will investigate whether e-book pricing in the United Kingdom violates that country’s 1998 Competition Act, which prohibits agreements, practices and conduct that may have a damaging effect on competition.

 

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