Agency pricing looms over France, UK

Independent French bookstores are eyeing e-books with fear, the Wall Street Journal reports (story behind paywall; to read the whole thing see this Google search).

In France, as in much of the rest of Europe, laws forbid stores from marking down printed books much below standard cover price, to protect small bookstores from the greater economic heft of large chains that could otherwise undersell them quite easily (as Wal-Mart has been doing in the US with its $8 hardcovers). However, these laws don’t apply to e-books, which are routinely being marked down to 25% below cover.

In the interest of protecting France’s 3,000 independent bookstores from this kind of competition, one French senator has proposed a law that would give publishers pricing control over e-books. The law is being hotly debated between e-book supporters and opponents, though another law that would cut the value-added tax on e-books from 19.6% to something closer to printed books’ 5.5% might serve to make it a little more attractive.

One supporter of the French law is Hachette Livre, France’s biggest publisher. This is not a great surprise, since Hachette is also pushing for agency pricing in the United Kingdom (and as a result a number of UK stores have stopped carrying its e-books). The United Kingdom is the only large European economy that allows booksellers freedom to discount publishers’ books, and there is some concern that British courts might rule agency pricing to be anti-competitive.

European culture can be quite different from American culture in certain key aspects, and freedom of pricing on books seems to be one of them. I doubt very many American consumers would be very happy if the government stepped in to protect smaller businesses by limiting how good a bargain stores could offer. But on the other hand, that’s pretty much what’s happened for e-books with agency pricing.

It’s going to be interesting to see what happens when and if someone decides to challenge agency pricing in court, on either side of the Atlantic.