Controversial e-book sales tactic banned in Canada

From The Globe and Mail:

Apple Inc.’s long legal struggle over alleged anti-competitive e-book pricing took another turn on Friday as the company joined a consent agreement with Canada’s Competition Bureau that will ban a controversial sales tactic for three years.

Three of Canada’s four major book publishers – Hachette Book Group Inc., Macmillan (a subsidiary of Verlagsgruppe Georg Von Holtzbrinck GmbH) and Simon & Schuster Inc. – also agreed to halt a system known as most-favoured nation (MFN) pricing, which prevented competing retailers from selling e-books at a discount compared to Apple’s minimum price. A Competition Bureau investigation had found that the MFN arrangement between Apple and the publishers led to higher prices for consumers.

There was no financial component to any of the agreements.

But a fourth major publisher – HarperCollins Publishers LLC – failed to reach an agreement, prompting the watchdog to refer the case to the Competition Tribunal, a separate body that adjudicates matters of business, economics and law.

Link to the rest at The Globe and Mail and thanks to Tudor for the tip.

7 thoughts on “Controversial e-book sales tactic banned in Canada”

  1. There is a subtle but important difference between MFN pricing and Amazon’s price-matching policies.

    MFN pricing is an agreement between a supplier and a vendor that no other vendor not part of the agreement will be allowed to sell for less than the first vendor.

    Price-matching is an agreement between a supplier and a vendor that if a third party vendor not part of the agreement sells for less, then first vendor may reduce prices to match the third party vendor without consulting the supplier.

    MFN pricing attempts to dictate actions to third parties not part of the agreement.

    A supplier setting a minimum sale price that applies to all vendors is agency pricing. It’s legal, but it’s not effective. It applies to all vendors, but not all suppliers. Suppliers colluding to set a minimum price that applies to all suppliers is illegal. It is also not effective unless all significant players participate. By the by, the Big5 no longer constitute “all significant players”.

    • “By the by, the Big5 no longer constitute “all significant players”.”

      And it upsets them greatly to not be able to control what can be offered when and for how much. 😉

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