OFT launches investigation into agency pricing

The Office of Fair Trading has launched an investigation into agency pricing, following a "significant" number of complaints.

The OFT said the investigation is "into whether arrangements that certain publishers have put in place with some retailers for the sale of e-books may breach competition rules".

However, it added: "The investigation is at an early stage and it should not be assumed that the parties involved have breached competition law."

If the parties involved were to be found in breach of competition riles, they could face a fine or a commitment of action in lieu of a fine. However, an OFT spokesperson refused to comment on whether it would have the power to halt the agency model.

It is unclear so far who made the complaint, despite several vocal opponents to the model. Amazon.co.uk previously said the agency model "was a damaging approach for readers, authors, booksellers and publishers alike." In a letter posted on its Kindle forum in October 2010, Amazon said: "In the UK, we will continue to fight against higher prices for e-books, and have been urging publishers considering agency not to needlessly impose prices increases on consumers."

The model, which allows publishers to set their own prices for e-books rather than a retailer, was first implemented in the UK by Hachette in September, with HarperCollins and  Penguin following suit in November. Simon & Schuster also made the switch at the end of the year. Macmillan and Canongate have yet to implement agency pricing in the UK, despite signing up to the model. Publishers signed up to agency in order to trade with Apple through its iBookstore.

The last major enquiry into the book trade was when Bertrams was bought by EUK, owned by Woolworths, in February 2007, effectively merging EUK and Bertrams. The merger was referred to the Competition Commission. The enquiry took eight months, with the Competition Commission finding the merger would not be "a substantial lessening of competion" in September 2007.

The OFT's team leader on this investigation will be Andrew Groves, with the project to be directed by Claudia Berg.