EU raids eBook publishers on antitrust suspicion

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The premises of several European publishing houses suspected of fixing the prices of their eBooks were searched yesterday (1 March) in dawn raids by EU competition authorities. 

Though the European Commission will not reveal which countries or which companies were involved, early indications reveal that French publishers were a focal point of the raids.

At 10.30am yesterday, EU inspectors swooped on French publisher Albin Michel to inspect the records, notebooks, tablets and mobile phones of executives and their assistants, according to French website 01Net.com.

The investigators reportedly sifted through nine computers looking for evidence of price-fixing with other eBook publishers.

Later in the day, the EU inspectors arrived at the offices of three other publishers, Hachette, Flammarion and Gallimard.

"The only thing they will find are legal contracts on the price of digital books," joked Francis Esménard, president of Albin Michel.  

"They descended on us like cowboys," Esménard said.

According to 01net.com, by 16:20 only three of the nine computers had been returned to their owners. At the same time, other agents arrived at Hachette, Flammarion and Gallimard.

The European Commission today issued a statement confirming the raids but did not say which companies were involved.

"The Commission has reason to believe that the companies concerned may have violated EU antitrust rules that prohibit cartels and other restrictive business practices," the EU executive said.

France has recently passed a law allowing publishers to agree on prices. France has historically had a fraught books market and prices are fixed by law to protect smaller book retailers. 

The 'Lang law', drafted by the former Minister of Culture Jack Lang in 1981, allows the publisher to determine the price of a new book and to print it on the cover. The seller can only reduce it by a maximum of 5%, or on special "sales days", but this does not apply to second-hand books.

The law reportedly goes against EU competition rules and apparently spurred yesterday's raids.

Esménard told 01net that publishers' hands have been forced by Amazon, which is evading taxes in Luxembourg.

"This operation is remote-controlled by Amazon. They settled in Luxembourg to avoid paying VAT in France and they want to sell the books at any price, as they do in the United States, offering bestsellers at $9.90. But they will not have our files!" Esménard said. 

Amazon dominates the market for physical books, while its burgeoning eBooks business has driven down the cost of digital books, leading publishers to take action.

Traditional publishing houses claim they need to be afforded some room for manoeuvre on prices because they need to cover costs, like salaries for editors and authors, which Amazon's online retail business does not have. 

Amazon declined to react to any the above comments.

Unannounced inspections or "dawn raids" are the first step of investigations into suspected anticompetitive practices. The second step is usually a letter warning the company of the European Commission's concerns, called a "statement of objections".

The Commission's inquiry into the French eBooks market comes in the wake of an identical investigation in Britain last month over alleged eBook price-fixing there.

In the 1980s the Commission allowed governments to fix the price of books as long as it did not affect countries' exchanges. However this was agreed at a time when eBooks did not exist.

If the publishers are found out for price fixing of eBooks, they could face heavy fines. 

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