Apple Inc. and other publishers have conspired to limit competition and fix the prices of e-books, the U.S. Justice Department alleges in a suit filed today.
According to The Wall Street Journal:
“The lawsuit, filed in Manhattan federal court by the U.S. Department of Justice’s Antitrust Division, alleges Apple and the publishers reached an agreement where retail price competition would cease, retail e-books prices would increase significantly and Apple would be guarantee a 30% ‘commission’ on each e-book sold.”
Bloomberg News says Justice sued “Apple Inc., Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster. … CBS Corp.’s Simon & Schuster, Lagardère SCA’s Hachette Book Group and News Corp.’s HarperCollins settled their suits today, two people familiar with the matter said.”
“Apple and Macmillan haven’t engaged in settlement talks with the Justice Department, Bloomberg reported. The companies have denied any wrongdoing and will argue that their agreement actually improved the competitive environment in the face of competition from Amazon and its own e-book business. …
“The probe apparently stems from changes made to how publishers charge for e-books when Apple released the first iPad two years ago. Book publishers began using an ‘agency model’ in which publishers set their own e-book prices, rather than the traditional wholesale model in which publishers set a retail price and retailers set their own sales price.”
The suit is not a surprise, as Eyder reported last month. And in December, news editor Sarah Weinman from Publishers Marketplace explained the Justice Department’s concerns to NPR’s Lynn Neary. From an “investigative body’s standpoint,” she noted, “just the very idea that there could be this uniform price might send up some red flags.”