Penguin Makes Bid to Settle E-Book Case With EU

BRUSSELS--Penguin Group (P13.SG) has offered to scrap its deal with Apple Inc. (AAPL). over the sale of electronic books in an effort to end an antitrust probe by European regulators.

The publisher, owned by the U.K.'s Pearson PLC (PSON.LN) is the final holdout in the case after other publishers, and Apple itself, settled with Brussels last December.

The European Commission launched formal proceedings at the end of 2011 alleging that Apple and five publishers had illegally colluded to fix the price of e-books ahead of Apple's first iPad launch in 2010.

Before the iPad, publishers would set a wholesale price and a suggested higher cover price for e-books, which retailers were free to discount. But Amazon.com Inc. (AMZN), seeking to promote its Kindle e-book reader, launched heavy price cuts on new best sellers, sending shock waves through the marketplace.

Apple offered publishers a new way to price their books that allowed them to set the final e-book price themselves and give Apple a 30% cut for selling the books through its iBookstore. The five publishers signed on with Apple and then imposed a new sales process on Amazon, effectively banning it from discounting.

The U.S. Justice Department and the European Commission filed antitrust proceedings against Apple and publishers Hachette, HarperCollins, Simon & Schuster and Penguin, accusing them of colluding to raise the price of e-books. Hachette, HarperCollins and Simon & Schuster agreed to settle the cases without admitting wrongdoing. Penguin settled the U.S. case in December, but continued to fight the allegations in Europe.

The European Commission said Friday that Penguin's offer was "substantially the same" as the deal struck last year with the other four publishers, which allowed Amazon and other retailers to resume discounting their titles in Europe.

If approved, the deal would allow Penguin to close the case without a fine. The EU's antitrust watchdog said Penguin's offer would first be sent out to third parties and rivals for reaction and that it would make a decision in the next month.

Penguin said it moved to settle in order to pave the way for its merger with Random House, the publishing unit of German media group Bertelsmann AG. Penguin said in a statement that it upheld its view that it had done "nothing wrong."

Under the proposed deal, Penguin will draw up new retail sales agreements and will refrain for five years from using special contracts that bar retailers from undercutting Apple's e-book prices.

Write to Vanessa Mock at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires