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EU investigates Apple and e-book publishers for “cartel” behavior

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Apple is once again in hot water with the European Commission, this time over its pricing strategies with e-book publishers.

The EC announced today that it has begun formal antitrust investigations into Apple and five major book publishers —  Hachette Livre, Harper Collins, Simon & Schuster, Penguin, and Macmillan owner Verlagsgruppe Georg von Holzbrinck — to determine how they arranged e-book prices.

“The Commission will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition in the EU or in the EEA,” the EC wrote in a statement today. “The Commission is also examining the character and terms of the agency agreements entered into by the above named five publishers and retailers for the sale of e-books. The Commission has concerns, that these practices may breach EU antitrust rules that prohibit cartels and restrictive business practices.”

The investigation likely sparks from a coordinated effort years ago between Apple and publishers to abolish Amazon’s then-typical $9.99 e-book pricing, Fortune’s Philip Elmer-DeWitt notes. Now, new e-books are often priced between $12 and $15 — with high-demand titles, like the recent Steve Jobs biography, selling for around $17 at launch (very close to its hardcover price).

Apple and the five publishers are already facing a class action lawsuit in California over the pricing change, which claims that they were “terrified” by Amazon’s low e-book pricing. Apple was a particularly useful co-conspirator because it was launching its iBooks store at the time. According to the suit, the publishers agreed to an “agency model” deal with Apple, which let them determine e-book pricing while Apple took a small cut. They also allegedly agreed not to sell e-books at prices lower than what Apple offered.

I’m not a legal expert, but it seems clear that something fishy went down with the launch of the iBooks store and the sudden emergence of more expensive e-books. If the EC’s investigation is successful, there’s hope that further exploration will occur in the U.S. and that someday we may finally see the return of cheap e-books.

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