May 1, 2009

German price-fixing practice undermined by Austrian "back-door for cheap books"


The German book market has long had one advantage over many other book markets: Sanity. That’s because the book business there follows a rule that few other countries follow: Everyone has to charge the cover price of a book. No discounting — it’s the law. And it’s meant that American companies like Amazon can’t come in and discount things so drastically that all the other retailers go out of business. Thus, the German book market has been a virtual oasis, where a wide variety of indie and boutique booksellers coexist with chain booksellers, and everyone has a chance against Amazon. Publishers, meanwhile, aren’t leveraged by giant retailers into having to offer discounts they can’t afford in a system that needs greater and greater discounts to keep going. And a wider variety of writers can find retailers interested in their work. It becomes a business about making quality affordable, not seeking the lowest common denominator of cheapness.

But it could all be about to end. The German system, long thought to be under imminent threat by Amazon finding new ways to throw its international weight around in influencing German regulations, is facing a threat from an unexpected quarter: Austria.

According to a Bookseller report by Keith Nuthall, the European Court of Justice has ruled that German books imported into neighboring Austria do not have to abide by the fixed pricing rule — meaning Austrian retailers could sell German books for less than the cover price, “raising fears that Austria could become a back-door for cheap books into Germany.”

According to the Court, “Such provisions constitute therefore a restriction on the free movement of goods.”

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives