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Retailers can now discount e-books in Canada

A commuter reads an e-book. The Competition Bureau said on Friday that Canadian consumers will benefit from a deal it has struck with four e-book publishers.

Brian Snyder/Reuters

A decision by the Competition Bureau means retailers will now be able to lower prices of e-books.

The bureau said it reached a deal with four major e-book publishers on Friday that forces them to drop their practice of stopping retailers from offering discounts on e-books. The publishers have to ditch the practice in the next 40 days, a bureau spokeswoman said.

"The agreement should benefit Canadian consumers by lowering the price of e-books in Canada," said John Pecman, commissioner of competition. "Businesses operating in the digital economy must realize that anti-competitive activity will not be tolerated, whether it occurs in the physical world or the digital one."

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Major retailers, including Indigo Books & Music Inc., the dominant specialist in the sector, did not respond directly to questions of whether they will cut their e-book prices as a result of the agreement.

Similar settlements in the United States over the past two years resulted in shaved prices for e-books there, the bureau said. It found that bestselling e-books are now sold at discounts of 20 per cent or more south of the border.

Bahram Olfati, a senior vice-president at Indigo, said in an e-mail that a similar U.S. decision had "minimal" effects on prompting consumers to change their e-reading habits. "We're expecting similar reaction here in Canada," he said. "We at Indigo are focused on getting Canada reading in any format." He declined to comment on pricing.

Following an 18-month investigation into the Canadian e-book industry, the bureau signed a consent agreement with Hachette Book Group, HarperCollins Canada Ltd., Macmillan Inc. and Simon & Schuster, which produce many of the country's bestselling e-books. It said it anticipates that competition among retailers will increase, resulting in lower e-book prices.

The four publishers have agreed to remove or change clauses in their distribution agreements with individual e-book retailers that the bureau believes have the effect of restricting retail price competition, which will allow retailers to offer discounts on e-books.

The bureau alleges that the publishers engaged in conduct that resulted in reduced competition for e-books in Canada, contrary to the civil competitor collaboration provision in the Competition Act.

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About the Author
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More


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