The Office of Fair Trading has closed its investigation into the agency model, indicating that it does not have the resources to continue. Instead it has pushed the onus onto the European Commission to resolve the issue. The OFT said it had not reached a decision one way or another. Update: the EC has put out a statement saying it is opening a 'formal investigation' into agency, naming  the publishers Hachette Livre, HarperCollins, Simon & Schuster, Penguin and Macmillan, Germany.

The OFT's missive is a somewhat strange announcement that will both bemuse and relieve those publishers on the agency model and those hoping to switch to agency terms. The spectre of an OFT decision is no more, but instead there will be worries about the European Commission probe, which was launched in spectacular fashion with raids on some European publishers earlier this year.

The OFT's brief statement gives no indication of its findings, or even a hint about what its decision might have been had it progressed with the investigation: meaning publishers are none the wiser about the authorities' view on agency. Bizarrely though the OFT has suggested that it may re-open its inquiry "in the future if it has reasonable grounds to suspect that there is an infringement of competition law, which may have an impact on UK consumers". But wasn't that the starting point of this probe?

In effect the OFT has handed over its brief to the EC, of which - up until today- we have heard barely anything for seven months. The EC says it will now "treat the case as a matter of priority".

One early implication of the OFT probe was that publishers who wished to move to agency terms stopped that process while they awaited news of the inquiry: but in the end, with the OFT taking so long over its deliberations, many just shrugged their shoulders and carried on anyway. I'd imagine the OFT's withdrawal will firm-up the resolve of those who haven't yet made the switch (Amazon-willing). The European Commission may have considerable powers to fine and cajole but inevitably it will be hard not to feel that the focus has shifted across the channel and towards a climate that is more benign to cultural sensibilities.

Here is the OFT's statement, which was clearly written by someone chanelling Sir Humphrey:

The OFT has decided to close its investigation into whether arrangements that certain publishers have put in place with some retailers for the sale of e-books may breach competition rules. This decision has been taken on the grounds of the OFT's administrative priorities, in particular because the OFT believes, following discussions with the European Commission, that the European Commission is currently well placed to arrive at a comprehensive resolution of this matter and will do so as a matter of priority.The OFT will continue to cooperate closely with the European Commission on this matter to help secure the best outcome for UK consumers.The OFT may reconsider its decision, in consultation with the European Commission, in the future if it has reasonable grounds to suspect that there is an infringement of competition law, which may have an impact on UK consumers.The OFT has not reached any view as to whether or not the parties involved have infringed competition law.

And here, just one hour later is the EC comment:

The European Commission has opened formal antitrust proceedings to investigate whether international publishers Hachette Livre (Lagardère Publishing, France), Harper Collins (News Corp., USA), Simon & Schuster (CBS Corp., USA), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holtzbrinck (owner of inter alia Macmillan, Germany) have, possibly with the help of Apple, engaged in anti-competitive practices affecting the sale of e-books in the European Economic Area (EEA), in breach of EU antitrust rules. The opening of proceedings means that the Commission will treat the case as a matter of priority. It does not prejudge the outcome of the investigation.  
The Commission will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition in the EU or in the EEA. The Commission is also examining the character and terms of the agency agreements entered into by the above named five publishers and retailers for the sale of e-books. The Commission has concerns, that these practices may breach EU antitrust rules that prohibit cartels and restrictive business practices (Article 101 of the Treaty on the Functioning of the European Union – TFEU).
The duration of antitrust investigations depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned cooperate with the Commission and the exercise of the rights of defence.