Justice Department Sues Apple And Publishers For E-Book Price Fixing

Justice Department Sue AppleThe suit was filed at the federal district court in New York and alleges that Apple conspired with Hachette, News Corp’s HarperCollins, Macmillan, Penguin, and CBS’ Simon & Schuster to limit competition — thereby keeping e-book pricing artificially high. But this may be a prelude to the announcement of a settlement: the Justice Department said that it will unveil an “unspecified” antitrust settlement today, Bloomberg reports. Word of the federal investigation into e-book pricing leaked last month. Officials were interested in a series of events that took place around 2010 when Apple introduced its iPad. Book publishers allegedly wanted to end Amazon’s practice of selling e-books for a deeply discounted $9.99, part of the company’s strategy to promote sales of its Kindle e-readers. Hoping to loosen Amazon’s grip on the market, and help its new iPad, Apple encouraged publishers to stop selling books wholesale — which enabled retailers to set the selling price– and to adopt a so-called “agency model.” That empowers publishers to set the sales price, and pay retailers a fee of about 30%. The late Apple CEO Steve Jobs told biographer Walter Isaacson that he told publishers “the customer pays a little more, but that’s what you want any way.” He added that publishers “went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books.’” Publishers denied that they conspired to raise prices; they said that they just wanted to promote competition.

This article was printed from https://deadline.com/2012/04/justice-department-sues-apple-and-publishers-for-e-book-price-fixing-255186/