AAPL Apple Inc

By Natalia Drozdiak 

BRUSSELS -- Amazon.com Inc. and Apple Inc. have abolished contractual obligations around the world that required the two companies to supply and distribute audiobooks solely with each other, under pressure from European Union antitrust regulators.

Germany's competition watchdog on Thursday dropped its formal probe into the companies' arrangements, while the European Commission, the bloc's antitrust regulator, which was also scrutinizing the companies' arrangements, said it welcomed the deal.

The so-called exclusivity obligations required Apple to source audiobooks only from Amazon's Audible unit which, in turn, was prevented from supplying its audiobooks to other digital platforms besides Apple's iTunes store, the two regulators said.

"The exclusivity agreement affected the sales opportunities of audiobook publishers since, apart from Audible, there were few alternative purchasers available," said Andreas Mundt, head of Germany's antitrust regulator, the Bundeskartellamt. Removing the obligations "will enable a wider range of offer and lower prices for consumers."

The agreement between two of the world's largest audiobook distributors, which was struck Jan. 5, 2017 but only made public Thursday, will likely "improve competition in downloadable audiobook distribution in Europe," the European Commission said.

An Audible spokesman confirmed the agreement with Apple which applies to contracts around the world, and not only in Europe. "We look forward to continuing to offer customers our unmatched selection of hundreds of thousands of audiobooks in the Apple iTunes store, and to working with our many content providers and audio partners," he said. Apple declined to comment.

The move comes after Germany's competition watchdog in 2015 opened an investigation into the two companies' audiobook arrangements following a complaint from the German Publishers and Booksellers Association. The EU was also informally looking into the matter based on a similar complaint from the publishers and said it has closely cooperated with the German authorities in the case.

"We very much welcome that the two companies have given up their exclusivity agreement and that iTunes is open for other audiobook providers," Alexander Skipis, head of the German Publishers and Booksellers association, said.

The U.S.'s Audio Publishers Association also viewed the agreement positively.

"Competition in the marketplace is always a good thing," said Michele Cobb, executive director of the trade group, which has an estimated 500 members.

"We're seeing more retailers selling audiobooks and coming to market with different business models. This decision should help that growth."

Ian Small, chief executive officer of Canadian-based retailer Audiobooks.com, described the development as exciting for consumers, content providers and distributors. "It's going to help the entire market," said Mr. Small. "The elimination of exclusivity opens up many possibilities."

One New York publishing veteran said authors stand to benefit because of a more competitive retail environment. "This allow for wider distribution, which means more people will be aware of books, and that can only be a good thing," said literary agent David Black.

Separately, the European Commission continues to formally investigate whether Amazon uses its market power to force illegal terms on publishers that harm purchasers of electronic-books. The EU and Amazon have been engaged in settlement talks in that case, people familiar with the matter say.

Jeffrey A. Trachtenberg contributed to this article.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

(END) Dow Jones Newswires

January 19, 2017 13:52 ET (18:52 GMT)

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