After a series of investigation, Apple and four major publishing house have come to an agreement with the European Commission to hand over e-book pricing powers to retailers.

Earlier suspicion arose that Apple and four major publishing house Hachette Livre, HarperCollins, Simon & Schuster and Macmillan, where involved in a "suspected concerted practice aimed at raising retail prices for ebooks in the European Economic Area." This practice allowed publishers rather than retailers to set the prices of ebooks.

The European Commission said that "the coordination of commercial behaviour between competitors - here, with the help of Apple - is forbidden by our competition rules".

"Our strong suspicion is that this was part of a global strategy to restrict competition at retail level and achieve higher prices," said Joaquin Almunia, vice president of the commission responsible for competition policy. "Whatever the publishers' initial concerns about retail prices, dealing with this situation through collusion is not acceptable. Our preliminary conclusion was therefore that this behaviour could possibly constitute an infringement."

Apple and the four publishers have agreed to immediately terminate all agreements with agencies and will give retailers the power to sell ebooks at whatever price they wish to for two years.

A report in the Guardian states that the commission and publishing house Penguin's owner Pearson are still in "constructive discussion".

"While each separate publisher and each retailer of ebooks are free to choose the type of business relationship they prefer, any form of collusion to restrict or eliminate competition is simply unacceptable," said Almunia. "The commitments proposed by Apple and the four publishers will restore normal competitive conditions in this new and fast-moving market, to the benefit of the buyers and readers of ebooks ... The alternative would probably have been to impose fines at the end of a long procedure. However this was not the best solution in the case of a nascent and very fast-moving market. Accepting these commitments means removing immediately the results of the collusion and restoring normal competitive conditions. This route is the quickest way to bring competition back to this market, to the benefit of all consumers who buy ebooks in Europe."

This comes as good news for avid ebook readers who can expect a plunge in ebook prices in the coming months.