Cover price

The investigation will assess whether the publishing groups and Apple engaged in illegal, anti-competitive practices while setting e-book prices for Apple's iPad tablet computer and digital bookstore in 2010, the European Commission said in a statement Tuesday.

The inquiry will target Hachette Livre, Harper Collins, Simon & Schuster, Penguin, and Verlagsgruppe Georg von Holzbrinck, which owns Macmillan, and their publishing arrangements with Apple, which created the iPad and iBookstore. The Commission added that the probe was in its early stages and did not mean that the companies broke EU competition law.

The Commission's announcement follows surprise inspections in March by EU competition authorities in the offices of several companies active in the e-book sector in several of the bloc's 27 states.

E-books, while continuing to rise in popularity in the United States, have been slow to penetrate the European market, largely due to massive fragmentation amongst various e-readers, lack of content in local languages, and fixed price arrangements between publishers and stores in many European states.

The e-book market has been dominated by Amazon.com's Kindle e-book reader as Apple and Barnes & Noble's struggle for market share.

In addition, e-books often require a much higher value-added tax rate than their analog counterparts. For example, in Germany, e-books are taxed at 19 percent, while printed books are taxed only at 7 percent.

According to recent analysis presented earlier this year at the "ifbookthen" conference in Italy, the European e-book market is worth about 80 million euros ($108 million), which is about one-tenth of the American e-book market. Of that, the United Kingdom accounts for approximately two-thirds of e-book sales, and Germany about one-quarter.

Author: Cyrus Farivar

Editor: Sean Sinico