New report condemns book-pricing deals

Date: 12/11/1998

By Renée Cordes

THE European Commission is set to spark a storm next week by arguing that book price-fixing agreements violate EU competition rules.

Culture Commissioner Marcelino Oreja will present a report to government ministers which concludes that, as a general rule, such deals are in breach of Union law.

The 100-page report, drawn up by an outside panel of experts, also concludes that the existence or absence of price-fixing deals between publishers does not have an economic impact on the book market. "There is no link between the level of the support system and the scale or growth of the market for books," it states.

The study also concludes that fixed book prices are being rendered obsolete by the increasing sale of products through the Internet, stating that the book market is "in a period of great change brought about by such technological developments as Internet retailing and print on demand".

When he presents the report at a meeting of EU culture ministers next Tuesday (17 November), Oreja will call on Bonn and Vienna to prove that the price-fixing accord between publishers in Germany, Austria and Switzerland does not violate Union law. It will then be up to Competition Commissioner Karel van Miert to decide whether to challenge the deal in the European Court of Justice.

However, both Oreja and Van Miert have indicated that they are willing to be flexible if countries can prove that such agreements are necessary for cultural reasons to, for example, protect small publishers who might otherwise not be able to stay in the market.

An Austrian official said this week that its government would "certainly" be able to demonstrate that such price deals were necessary to protect small publishers from going out of business.

Austrian retailer Libro has led the attack on existing price deals and the publishers from Germany, Austria and Switzerland which are fighting to maintain them.

The agreements at the centre of the controversy are binding on publishers and retailers in all three countries and ban discount cross-border sales. About four out of every five books sold in Austria are published in neighbouring Germany, and some German publishers fear an end to the current arrangement could harm their business.

"We have always been in favour of fixed book prices," said Friederike Harmgarth, spokeswoman for Bertelsmann Buch AG in Munich. "It has led to a large variety of books on the market and German consumers have the advantage of being able to get any title within 24 hours."

The Commission's move comes as Europe's booksellers are facing increasing competition from companies such as US Internet bookshop Amazon.com, which has recently opened retailing and shipping operations in Germany and the UK.

Many industry experts argue that, in the long run, the growth of online discount book retailing is likely to help sales in European bookshops.

"Overall, it is expanding the market rather than damaging it," said Brandon Hoey, an analyst at Paribas in London. "Unless people are buying in bulk, there won't actually be a significant price difference."