EU Push to End Price-Fixing Puts Germany’s Booksellers in a Bind

“If it ain’t broke, don’t fix it” might seem good advice for the publishing industry in Germany, where each year more books are produced, sold and read per capita than in any country other than Britain.

But for more than 100 years, book prices here have been fixed by agreement between publishers and booksellers, and in the Continent’s dawning age of a common currency and strengthening integration, European Union cheerleaders for competition say price-fixing must go.

German publishers and booksellers vehemently defend fixed prices as beneficial to writers and readers. Small specialty bookshops face little risk of being run out of business by big chain stores, a la the story line of the film “You’ve Got Mail.” And by guaranteeing themselves profits from the sale of likely bestsellers, they argue, publishers can afford to take risks on unknown authors and offer a wider variety of books.

A final ruling was delayed by the resignation last month of the EU’s free-market watchdog, Karel van Miert, and the other 19 commissioners in Brussels. But in anticipation of a final judgment that the status quo stifles competition, Germany’s powerful alliance of 5,000 booksellers, the Boesenverein, has mobilized for a protracted fight.

Advertisements warn German readers that their favorite corner bookshops would be forced out of business, government officials vow to take the matter to the European Court if the EU bureaucrats refuse to compromise, and publishers are polishing their arguments that books have a cultural value that transcends other goods.

“It’s unacceptable for books to be treated the same as soap,” insists Friederike Harmgarth, head of public relations and cultural affairs for the largest of German publishers, Bertelsmann. “Books have both a business and a cultural dimension. They are products on one hand, but with a different, additional value because of this other dimension.”

An end to price-fixing will set in motion the decline of Germany’s vibrant book market and make it harder for first-time authors to even get their manuscripts reviewed, the publishers say.

“Imagine if Kafka or Joyce were not able to get published because big bookstore chains said, ‘This is not for us,’ ” argues Rene Strien, publishing director at the Aufbau house in Berlin, one of the few publishers to have survived the rash of sellouts and bankruptcies among such businesses in the former East Germany.

German publishers are virtually unanimous in their insistence that competitive pricing would severely reduce the number of new titles they could publish each year--now nearing 80,000, according to the Boesenverein, compared with 60,000 new books released each year by U.S. houses.

“Germany publishes per capita about four times as many books as the United States,” says Michael Naumann, the new German minister for cultural affairs and until recently head of the Henry Holt and Co. publishing house in New York. “Germany is a book publisher’s paradise, but it is also a book reader’s and bookseller’s paradise.”

Book sales in Germany exceed $10 billion a year, according to the Boesenverein.

Here in Bavaria state, home to many media and publishing heavyweights, politicians are united across party lines in the battle against Brussels’ efforts to break the price-fixing cartel--an effort spurred by an Austrian publisher’s complaint to the EU.

“This isn’t the usual moaning among merchants about some impending tax reform,” says Ludwig Stiegler, head of the Social Democratic faction in the state parliament, about the EU order. “These plans threaten the very existence of booksellers and publishers.”

Looking to the example of Britain, where publishers and booksellers decided on their own to drop a similar price-fixing arrangement in 1995, booksellers predict that small shops would be driven to bankruptcy by the thousands because a few handfuls of big players could demand discounts from publishing houses. Some smaller British booksellers have shuttered their shops since the pricing revisions, but sales have remained brisk enough for Britons to retain their standing as the world’s most avid readers.

Naumann predicts that niche-market publishers, who provide much of the rich variety of offerings from among Germany’s 2,000 houses, would be unable to survive amid what he predicts would be “cutthroat competition” benefiting only the biggest firms.

Even those best positioned to cash in on a more competitive market contend that price-fixing is worth preserving for its benefits.

“It is important for consumers to recognize price-fixing for what it is--a commitment to jobs and training as well as to diversity in the book market,” says Andreas Kiepert, director of the giant Kiepert bookstore chain acquired by his grandfather in 1913. “Our employees are not just clerks selling books. They know literature, and they know the clientele. Someone can come in and say they are looking for a book on a certain subject but all they can remember is that it has a blue cover, not the author or title, and we can probably still find it for him.”

Bookstore employees dealing with customers are required to complete a two-year training program, even if they have a college education. The industry prides itself on a promise that any of the about 770,000 titles in print in Germany can be delivered to a customer within 24 hours.

Book prices also are fixed in eight other EU countries. But Brussels’ intervention has so far been sought only in Germany, the target of the Austrian publisher’s complaint. Naumann, who has been negotiating with the EU over the issue, predicts that the commission will go after other price-fixers if it prevails here.

Naumann also expects that EU administrators in Brussels will offer some compromise to Germany, such as a five-year transition period.

By then, the issue may be moot. Although Germans are far less active on the Internet, which is increasingly the venue of U.S. book sales through Web site marketers such as Amazon.com, technology likely will catch up with the German market.

Despite the media blitz by the Boesenverein, German book buyers are more divided over the value of fixed prices than are those who fix them.

“It would probably be like they say in the newspapers--that the small shops will die out and the big ones will survive and that the quality of books will suffer,” says Ulrike Minzlaff, browsing at a bookseller in Berlin.

But bank executive Werner Kloke waves off the industry warnings of disaster.

“There will be price wars at the beginning, but mostly for trashy literature.” predicts Kloke. “I think the situation for serious literature would remain stable, with prices perhaps becoming more fair.”