Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Canada Competition Bureau, publishers enter consent agreement to promote competition in e-book market, (Feb 7, 2014)

By John W. Arden, J.D., LL.M.

Following an 18-month investigation, the Canada Competition Bureau has entered into a consent agreement with four major publishers to protect and promote competition in the e-book market in Canada, the agency announced today.

The Competition Bureau signed the consent agreement with Hachette Book Group, HarperCollins, Macmillan, and Simon & Shuster, publishers of many of the bestselling e-books in Canada.

According to the agreement, the Commissioner of Competition commenced an inquiry relating to certain alleged anti-competitive conduct that substantially lessened competition contrary to Section 90.1 of the Competition Act.

In order to resolve these concerns, the publishers agreed for a period of 18 months to refrain from restricting, limiting, or impeding an e-book retailer’s ability to set, alter, or reduce the retail price or to offer price discounts or enter into any agreement that has the effect of restricting, limiting, or impeding such retail conduct. The publishers further agreed to refrain, for a period of four years and six months, from entering into any agreement with an e-book retailer that contains a “Price MFN,” that is, a term that makes the wholesale or retail price of an e-book depend on the retail price at which any other retailer or publisher sells that e-book or that makes the revenue share or commission on one or more e-books depend on the revenue share or commission that other retailer receives from the publisher. Under the consent agreement, the publishers may not retaliate against any other publisher or retailer for engaging in conduct allowed by the agreement.

Each publisher must furnish to the Commissioner within 30 days of the registration of the consent decree a copy of each of its agreements with retailers relating to the sale of its e-books to consumers in Canada. Thereafter, a publisher must provide to the Commissioner, on a quarterly basis, any new agreement or amendment to an agreement with a retailer.

Similar settlements reached in the United States in 2012 and 2013 resulted in lower prices for e-books in that market, the Competition Bureau stated. The Bureau’s monitoring of the effects of the U.S. settlements shows a 20 percent discount on some bestselling e-books.

“This agreement should benefit Canadian consumers by lowering the price of e-books in Canada,” Commissioner of Competition John Pecman observed. “Businesses operating in the digital economy must realize that anti-competitive activity will not be tolerated, whether it occurs in the physical world or the digital one.”

Companies: Hachette Book Group; HarperCollins; Macmillan; Simon & Shuster

News: Antitrust