DOJ Sues Apple & 5 Publishers for Fixing E-Book Prices

The antitrust lawsuit accuses Apple and five separate publishers of colluding to fix the price of e-books in violation of federal antitrust law. Hachette, HarperCollins, and Simon & Schuster have settled with the Justice Department, but the remaining three defendants—Apple, Penguin, and Macmillan have not.

Apparently, the price-fixing scheme began a few months prior to the release of the first iPad, and the publishers reportedly took steps to conceal secret communications with each other. 

via Talking Points Memo:

The publishers and Apple ended up entering into an agreement. Jobs’ own email to a publisher proves to be quite damning with Jobs stating that the publishers could work with Apple or pursue one of two other choices: “Keep going with Amazon at $9.99” or “hold back your books from Amazon.”

In April 2010, publishers began charging $12.99, $14.99 or $16.99 for e-book versions of new hardcover titles.

Previously, the DOJ points out, e-book pricing occurred in a “wholesale model,” wherein publishers sold their books to retailers at varying prices, then retailers were free to charge whatever they wanted for them.

The “agency model” that Apple and the five publishers implemented involved agreeing to fixed prices prior to selling the books through Apple’s iBookstore, according to the DOJ.

If approved by the court, a settlement will grant retailers such as Amazon and Barnes & Noble the freedom to reduce the price of their e-books. They would also be required to “terminate their anticompetitive most-favored-nation agreements with Apple and other e-books retailers.”

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