Is There an Apple Conspiracy?

There may be a conspiracy afoot, one that might even involve Apple (Nasdaq: AAPL  ) as an accomplice, although it has nothing to do with coaxing you into buying an iPhone 4S (it doesn't need help there).

The European Commission has opened a formal antitrust investigation into five e-book publishers and Apple, a possible accomplice through its iBookstore store, into allegations of collusion and stifling competition. The publishers in question are Lagardere's Hachette Livre, News Corp.'s (Nasdaq: NWSA  ) Harper Collins, CBS's (NYSE: CBS  ) Simon & Schuster, Pearson's (NYSE: PSO  ) Penguin Group, and Verlagsgruppe Georg von Holtzbrinck's Macmillan division.

The commission alleges that the publishers may have "engaged in anti-competitive practices affecting the sale of e-books in the European Economic Area," in violation of antitrust regulations. The entity will look into the group's agency agreements and see whether the publishers' and retailer's practices breach rules against cartels and restrictive business practices.

The investigation was due in part to a PricewaterhouseCoopers report that European e-book sales have been slow because of fixed price agreements and a limited selection of non-English titles. Bloombergalso mentioned that previous complaints from Amazon.com (Nasdaq: AMZN  ) may have contributed to heightened regulator scrutiny.

Interestingly, Apple's insistence on using the agency model in its iBookstore -- taking a 30% cut while giving publishers pricing freedom -- effectively forced Amazon to similarly adopt agency agreements with publishers. Before that, Amazon retained pricing control and was able to offer e-books at extremely low prices.

The EC says it won't prejudge the outcome of the investigation, but either way, Apple is no stranger to scrutiny over its iBooksstore. The Mac maker faced a similar probe stateside in Connecticut last year, along with Amazon, over its e-book pricing. Apple and the same five publishers are even the target of a class action lawsuit over how the agency model has pushed e-book prices higher.

Apple's disruptive ways forced Amazon's hand in changing its Kindle book pricing. While readers may not appreciate the notched-up prices, Apple and its shareholders will sure enjoy their share.

Add these publishers and booksellers to your Watchlist to see how events unfold.

Fool contributor Evan Niu owns shares of Amazon.com and Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Amazon.com and Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 08, 2011, at 4:01 AM, H3D wrote:

    Amazon's stranglehold was based on keeping the price low and bleeding publishers in order to build a monopoly on ebooks.

    The publishers grasped at the agency model as it ecsured their survival.

    This broke Amazon's ability to force the publishers to fund their monopoly.

    Tough.

  • Report this Comment On December 08, 2011, at 7:51 AM, jdmeck wrote:

    Apple created the portal. Apple spent tons of money building the portal, and spends money managing it. They deserve a cut and deserve to charge whatever they want. The publishers are free to go elsewhere. Customers are free to go elsewhere. These socialist are pizzing me off.

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