DOJ reaches settlement with some, but fight over eBook pricing against Apple, Macmillan, Penguin rages on

Ending weeks of speculation, the Department of Justice has announced that it has reached a settlement with Hachette, HarperCollins, and Simon & Schuster over eBook pricing. However, Apple, Holtzbrinch (d/b/a Macmillan) and Penguin have refused to settle, so the DOJ will continue to litigate cases against them.

The settlement resolves charges that book publishers were engaged in a conspiracy to restrict retailers’ (like Amazon and Barnes & Noble) competition for the price of eBooks. The publishers stopped selling eBooks on wholesale to bookstore, and instead introduced an agency model, to control and raise the prices of eBooks. The result, according to the DOJ, was higher prices that consumers had to pay for eBooks–prices that amounted to millions of dollars more than market value. Specific allegations against Apple claim that publishers paid Apple a 30 percent commission per eBook purchased on the iBookstore. The publishers also promised that no other retailer would sell their eBooks at lower prices.

The terms of the settlement requires publishers to terminate agreements with Apple and other eBook retailers. Furthermore, a two-year ban prevents publishers from entering into new agreements that restrict a retailer’s ability to offer discounts and promotions on eBooks. The settlement also calls for antitrust compliance programs that mandates advance DOJ notification for any joint eBook ventures with other publishers.

In her remarks prepared for an eBook conference, Acting Assistant Attorney General Sharis Pozen pulled out choice quotes from the complaint to show publishing execs’ knowledge and intent of the conspiracy: “‘the goal is less to compete with Amazon as to force it to accept a price level higher than 9.99.’ And yet another said, ‘we’ve always known that unless other publishers follow us, there’s no chance of success in getting Amazon to change its pricing practices.’” Pozen also commended state attorneys general (notably Connecticut and Texas) and the European Commission for their help, noting, “Never before have we seen this kind of cooperation on a civil antitrust enforcement matter.”

Full content: DOJ Press Release

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