Apple Inc (AAPL), Publishers Reach Deal with EU Regulators

Apple Inc (NASDAQ:AAPL) and four prominent publishing houses have put forth a settlement offer with European Union regulators, and all indications are the regulators will accept the offer and not resume their price-fixing inquiry involving e-book sales which were directed to take market share from Amazon.com Inc (NASDAQ:AMZN), according to a report.

The regulators had been targeting Apple Inc (NASDAQ:AAPL) and five publishers – Simon & Schuster, HarperCollins, Hatchette Group, Penguin Press and Macmillan – for price fixing, artificially raising e-book prices to force Amazon.com Inc (NASDAQ:AMZN) to increase its prices and create more competition in the e-book market, in which Amazon is the leader. The investigation stemmed from a claim in 2010 that Apple had colluded with the publishing houses to move their e-book inventories to the agency model of pricing, in which the publishers dictated the price of the e-books, from the old wholesale model, which allowed retailers to determine their selling prices.

With the publishers pricing their e-books, they became more uniform across all retailers, which the EU claimed helped Apple Inc (NASDAQ:AAPL) become more competitive as it tried to develop ad grow its own e-book business. No details of the settlement offer were made readily available because commissioners still have to officially approve the deal, but only Penguin Press is not involved in the offer. The expectation is that this offer will allow Amazon.com Inc (NASDAQ:AMZN) as well as other e-retailers to sell digital books at the prices they want in the increasingly competitive market.

There is no report that the commissioners are asking for any more concessions from Apple Inc (NASDAQ:AAPL) or the publishers. A source said, “The Commission is likely to accept the offer and announce its decision next month.” Though we don’t know the details of the offer, what do you think? How will this affect the e-book market for Apple and Amazon.com Inc (NASDAQ:AMZN)? Can Apple Inc. (AAPL) keep its share, or does Amazon.com restore its superiority? How would billionaire fund managers like David Tepper of Appaloosa Management LP or Jim Chanos of Kynikos – those invested in either of these companies – will see this, knowing that a similar case is being worked out in the U.S.? We’d like your feedback!