More competition for ebooks in Canada coming soon

The Competition Bureau announced today that it has signed a consent decree with the four major book publishers, which is expected to lower the price of ebooks in Canada.

According to the Bureau’s media release, the agreement between the Bureau and Hachette Book Group, HarperCollins, Macmillan, and Simon & Schuster follows an 18-month investigation into the ebook industry in Canada.

Under this consent agreement, which has been registered with the Competition Tribunal, the four publishers have agreed to remove or amend clauses in their distribution agreements with individual ebook retailers that the Bureau believes have the effect of restricting retail price competition, which will allow retailers to offer discounts on ebooks.

The Bureau expects that competition among retailers will increase, resulting in lower prices for ebooks. The terms of this consent agreement are similar to settlements reached in the United States in 2012 and 2013, and which resulted in lower prices for ebooks in the US. According to the Bureau, it has been monitoring the effects of the US settlements and observed that discounts of 20 per cent, and sometimes higher, can now be found on certain bestselling ebooks.

The Bureau also noted that its “investigation into the ebook industry in Canada continues at this time”. This means that the consent agreement does not conclude the Bureau’s investigation and that a broader investigation may be going on.

Interestingly, the consent agreement may not apply to the sale of ebooks to educational institutions or libraries. The terms “Sale” or “Sell” are defined as “delivery of access to a consumer in Canada to read one or more E-books in exchange for payment. Delivery of access to an educational institution or a library is not a Sale.”

It is difficult to know whether the exclusion of educational institutions and libraries is a matter for concern, whether it is an indication that the Bureau has no concerns about competition among publishers in that sector, or whether it simply reflects the a narrow focus on retail sector, while other aspects of practices in the publishing industry might be part of the broader inquiry.

While this case involves issues at the forefront of the digital economy, concerted attempts by publishers to maintain higher retail prices for books have actually been one of the defining features of the book trade. I mentioned some of those historical precedents in two earlier posts:

• History Repeats: Publishers, Retailers, and Antitrust, and
• Isn’t that great?

I’m currently finalizing a paper on this topic. Stay tuned.