BRUSSELS--Penguin Group (P13.SG) has offered to scrap its deal
with Apple Inc. (AAPL). over the sale of electronic books in an
effort to end an antitrust probe by European regulators.
The publisher, owned by the U.K.'s Pearson PLC (PSON.LN) is the
final holdout in the case after other publishers, and Apple itself,
settled with Brussels last December.
The European Commission launched formal proceedings at the end
of 2011 alleging that Apple and five publishers had illegally
colluded to fix the price of e-books ahead of Apple's first iPad
launch in 2010.
Before the iPad, publishers would set a wholesale price and a
suggested higher cover price for e-books, which retailers were free
to discount. But Amazon.com Inc. (AMZN), seeking to promote its
Kindle e-book reader, launched heavy price cuts on new best
sellers, sending shock waves through the marketplace.
Apple offered publishers a new way to price their books that
allowed them to set the final e-book price themselves and give
Apple a 30% cut for selling the books through its iBookstore. The
five publishers signed on with Apple and then imposed a new sales
process on Amazon, effectively banning it from discounting.
The U.S. Justice Department and the European Commission filed
antitrust proceedings against Apple and publishers Hachette,
HarperCollins, Simon & Schuster and Penguin, accusing them of
colluding to raise the price of e-books. Hachette, HarperCollins
and Simon & Schuster agreed to settle the cases without
admitting wrongdoing. Penguin settled the U.S. case in December,
but continued to fight the allegations in Europe.
The European Commission said Friday that Penguin's offer was
"substantially the same" as the deal struck last year with the
other four publishers, which allowed Amazon and other retailers to
resume discounting their titles in Europe.
If approved, the deal would allow Penguin to close the case
without a fine. The EU's antitrust watchdog said Penguin's offer
would first be sent out to third parties and rivals for reaction
and that it would make a decision in the next month.
Penguin said it moved to settle in order to pave the way for its
merger with Random House, the publishing unit of German media group
Bertelsmann AG. Penguin said in a statement that it upheld its view
that it had done "nothing wrong."
Under the proposed deal, Penguin will draw up new retail sales
agreements and will refrain for five years from using special
contracts that bar retailers from undercutting Apple's e-book
prices.
Write to Vanessa Mock at vanessa.mock@dowjones.com
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