A strong protest from Kobo convinced Canada’s Competition Tribunal to suspend an agreement announced last month between four multinational publishers and Canada’s Competition Bureau regarding e-book pricing.
“We are very pleased that Canada's Competitions tribunal has seen fit to stay the implementation of the Competitions Bureau's consent agreement regarding Agency in Canada until Kobo's application can be heard,” Michael Tamblyn, Kobo’s chief content officer, wrote in an e-mail to PW.
The tribunal is expected to issue a full opinion on its decision this week but, in the meanwhile, Tamblyn pointed to a recent article in the Global Competition Review that reported that Kobo had argued that the agreement would “end or ‘fundamentally alter’ its agreements and risk putting it out of business.” The agreement was due to take effect on March 20.
The agreement--it was signed by Hachette Book Group Canada, HarperCollins Canada, Simon & Schuster Canada, and Macmillan Canada--was announced in February, and followed what the competition bureau said was an 18-month investigation that suggested that the publishers had “engaged in conduct that resulted in reduced competition for e-books in Canada.” It is important to note that as part of the agreement, none of the publishers conceded they had been involved in any wrongdoing.
The publishers involved did, however, agree to amend any clauses in their distribution agreements with e-book retailers that would “restrict, limit or impede an e-book retailer’s ability to set, alter or reduce the retail price of any e-book for sale to consumers in Canada,” effectively ending the agency model of pricing.
Another aspect of the agreement that resembled settlements between publishers and the U.S. Department of Justice was a four-and-a-half-year ban on “most favored nation” clauses.
When asked why Penguin Random House Canada was not included in the agreement, a spokesperson for the Competition Bureau said she could not comment because the Bureau’s investigation is ongoing.
When the agreement was announced, the Competition Bureau had predicted that it would help to lower e-book prices in Canada, as such settlements were reported to have done in the U.S.
The tribunal’s decision to suspend implementation, said Tamblyn “represents a solid step forward in ensuring Canadian consumers have a diversity of e-book retailers to choose from when they decide to read digitally. We are now negotiating the timing of the full hearing with the Bureau. Our emphasis will be on a speedy resolution to these issues.”