After the Competition Bureau of Canada last week sought a court order that could force Indigo Books and Music and Kobo to turn over records as part of an investigation into anti-competitive e-book pricing practices, Michael Tamblyn, president and chief content officer of Kobo said the company is “astonished” by the move.
“We are obviously surprised that in this latest evolution of the Bureau’s investigation, only those who challenged the Bureau’s previous settlements with publishers are being singled out for this particularly onerous process [of being forced to turn over more information],” Tamblyn said in an email to PW. He noted that Kobo had consistently cooperated during the two-and-a-half year investigation “and has already voluntarily produced to the Bureau records and reams of data.”
The Competition Bureau also responded to PW’s inquiries via email. Greg Scott, a senior communications adviser, said some stories in the media have incorrectly reported that Indigo is the subject of the bureau’s investigation. “In fact, at this time, Indigo is not the subject of the Bureau’s ongoing investigation. Rather, the Commissioner is currently seeking information from Indigo and Kobo pursuant to section 11 of the Competition Act to further its ongoing investigation.”
In March of 2014, a strong protest from Kobo successfully convinced Canada’s Competition Tribunal to suspend an agreement between four multinational publishers—Hachette Book Group Canada, HarperCollins Canada, Simon & Schuster Canada, and Macmillan Canada—regarding e-book pricing. Although none of the publishers conceded they had been involved in any wrongdoing, they did agree to amend any clauses in their distribution agreements with e-book retailers that would “restrict, limit or impede an e-book retailer’s ability to set, alter or reduce the retail price of any e-book for sale to consumers in Canada.” The move effectively ended the agency model of pricing in Canada.
Another aspect of the agreement that resembled settlements between U.S. publishers and the Department of Justice was a four-and-a-half-year ban on “most favored nation” clauses. At the time, the Global Competition Review reported that Kobo had argued that the agreement would “end or ‘fundamentally alter’ its agreements and risk putting it out of business.”
Tamblyn stressed to PW that “no case has been brought against Kobo" and the challenge Kobo has brought before the Competition Tribunal is "meant to test whether there is even a case to be made against the publishers.” Although the tribunal has yet to rule on the challenge, Tamblyn said Kobo maintains there has been no violation of the Competition Act by it, or by any of the publishers, and it is "confident that the Tribunal will come to the same conclusion.”
A spokesperson for Indigo said that the company, "as a general policy," does not comment on matters currently before the court.
When the Competition Bureau’s agreement with the four multinationals was announced in February 2014, a spokeswoman for the bureau said she could not comment on why Penguin Random House Canada was not included, because the investigation was ongoing.
Scott’s message to PW noted that in March 2014, the Canadian Federal Court granted an order that also required Penguin, as a publisher of e-books, “to produce certain records and to make and deliver written returns of information relevant to the Bureau’s investigation.”
He added, that at this time, “there is no conclusion of wrongdoing by Penguin, Kobo or Indigo, and no application has been filed with the Competition Tribunal or any other court to seek remedies for any alleged anti-competitive conduct on the part of Penguin, Kobo or Indigo.“
