European publishers offices raided by EC inspectors

European publishers offices raided by EC inspectors

A number of European publishers have had their offices raided by inspectors from the European Commission investigating alleged price-fixing of digital books. In some cases laptops and smartphones of senior executives have been seized.

The Directorate General for Competition said the Commission had "reason to believe that the companies concerned may have violated EU antitrust rules that prohibit cartels and other restrictive business practices", but a spokeswoman added separately that it did not have "any proof". It said that it carried out "unannounced inspections" at publishing companies in several member states.

UK publishers Penguin and HarperCollins said they had not been approached, but French publisher Hachette Livre confirmed that an inspection had been conducted beginning on Tuesday (1st March) and continuing Wednesday at its Paris headquarters. "We are being as helpful as we can," said communications director Ronald Blunden. He could neither confirm nor deny that the agency model was target of the raid. "The inspectors are telling us nothing," he said. "We use the agency model to sell e-books in all our markets." A second French house Gallimard has confirmed that it was raided on Tuesday. Flammarion and La Martinière have also confirmed the raid. The inspectors arrived at La Martinière (Tuesday) and were still there as of Wednesday 4pm.

The AFP reported the following quote from Amelia Torres, spokeswoman for Competition Commissioner Joaquin Almunia: "The competition services Tuesday conducted inspections in publishing houses in several European Union countries due to suspicion of anti-competition practices in the pricing of e-books. We are not naming the publishing houses nor the countries because we are just at the beginning of the inquiry. We are not accusing anyone and we do not have any proof."

Speaking to The Bookseller, Torres declined to say how many countries were involved, describing the number as "a few",  but added that if the Commission’s suspicions were confirmed, the practice concerned consumers throughout the EU. Although the Commission has received no official complaint about anti-competitive practices, it has received several letters from consumers and parliamentarians. She declined to comment on whether agency pricing was the prime target of the inspection, since the investigation was just at the beginning. For the moment, the competition directorate-general had no position on the issue, she added.

In France publishers have been working on an extension of the Lang Law on fixed prices which would include e-books, but have been operating under agency terms in the short term. Similar discussions are happening across Europe where fixed price agreements still hold for print books. The OFT launched its investigation into agency pricing last month. In an opinion on e-book prices in December 2009, the French Competition Authority said that the agency model was "a possible solution" and that a proper "agency contract" would comply with French competition law. But this option would restrict booksellers’ freedom to stock and promote the titles of their choice, which is one of the culture ministry’s objectives, the authority added.

A statement from the Directorate General for Competition read: "The European Commission can confirm that on 1 March 2011 Commission officials initiated unannounced inspections at the premises of companies that are active in the e-book (electronic or digital books) publishing sector in several Member States. The Commission has reason to believe that the companies concerned may have violated EU antitrust rules that prohibit cartels and other restrictive business practices (Article 101 of the Treaty on the Functioning of the European Union).

"The Commission officials were accompanied by their counterparts from the relevant national competition authorities. Unannounced inspections are a preliminary step into suspected anti-competitive practices. The fact that the Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself. The Commission respects the rights of defence, in particular the right of companies to be heard in antitrust proceedings.

"There is no legal deadline to complete inquiries into anti-competitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence."