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German Publishers Raided in Discount Clash
Herbert R. Lottman -- 8/7/00
The long expected clash between the traditional German book trade and a new generation of aggressive chain and Internet discounters has come to pass--but in an unexpected way. German publishers who had threatened to boycott an e-commerce vendor were in turn the object of the vendor's complaint to European Commission free trade authorities, who quickly dispatched a team of inspectors for a surprise raid on publishers and distributors--Bertelsmann among them--as well as to the Borsenverein, German book trade headquarters in Frankfurt, to determine whether collusion is indeed involved.
While both Germany and Austria enforce fixed prices on retail book sales--the former by publisher-bookseller convention, the latter under terms of a recently voted law--EU authorities in Brussels have ruled against cross-border retail price maintenance (rpm). In theory, this could allow an Austrian bookseller to ship German-origin books back to Germany for sale at discount, and at least one entrepreneur was ready to take advantage of that loophole. The chief target of German ire was Andre Rettberg, owner of Austria's number one bookshop chain, Libro, whose online operation, Lion.cc, had begun to discount German books (20%) to all. In reaction, leading publishers and distributors in Germany cut off shipments both to Lion and its parent retailer, Libro. Hence operator Rettberg's complaint--and the dramatic gangbuster response. (The inspectors also called at Libro, which has since held separate talks with Bertelsmann and perhaps with other German publishers, resulting in an agreement not to sell into Germany at discount. This in itself could be seen as an illegal restriction to competition.)
The broader context is a campaign by German and French book trades, supported by their governments, to stem the erosion of rpm in Europe, apparently on the theory that free prices are contagious. Neighboring European states are indeed making seditious noises. Spain, which had followed France's lead in voting fixed prices into law, recently authorized discounting of textbooks; Denmark revised its rules to limit the time span during which rpm could be applied; while in Italy, the net book agreement is regularly violated for favorite customers, as well as in supermarkets and other mass distribution channels. In France, meanwhile, Culture Minister Catherine Tasca actually proposed that during France's six-month chairmanship of the European Commission (which began on July 1) it will seek to extend French punitive rpm law to all EU states.
German Culture Minister Michael Naumann--who in earlier incarnations had been CEO and publisher at New York's Henry Holt and Germany's Rowholt (both Holtzbrinck companies)--is leading the pro-rpm lobby in Brussels on behalf of his government. The irony is that the countries spearheading the resistance, Germany and France, are those whose book trades have been stagnant for years, and would seem to be in need of whatever stimulation they can get. Privately, Holtzbrinck executives have long hoped for a collapse of fixed prices, which are seen as inhibiting creative bookselling, while Bertelsmann book clubs in both Germany and France endeavor in their catalogues and club stores to give the impression of discounting without actually infringing the rules.
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