Apple sued for ebook price fixing

The US Department of Justice has filed a lawsuit against Apple and several book publishers, claiming that they worked together to artificially prop up prices for ebooks.

(Credit: Stephen Shankland/CNET)

The publishers sued are Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster. The suit (posted below) was filed in a District Court in New York.

"Apple facilitated the publisher defendants' collective effort to end retail price competition by coordinating their transition to an agency model across all retailers," according to the complaint.

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 ebook business.

CBS's Simon & Schuster, Lagardre's Hachette Book Group and News Corp's HarperCollins are looking to settle with the US government as soon as today, Bloomberg reported, citing anonymous sources. (Disclosure: CBS also owns CNET.)

Bloomberg said that the Justice Department would announce an "unspecified" antitrust settlement.

The probe apparently stems from changes made to how publishers charge for ebooks when Apple released the first iPad two years ago. Book publishers began using an "agency model", in which publishers set their own ebook prices, rather than the traditional wholesale model in which publishers set a retail price and retailers set their own sale price.

The pricing model materialised in 2010, after book publishers asked Amazon to increase the price of ebooks on its website, but Amazon stood firm in its contention that anything above US$9.99 was too high. Amazon eventually relented after many popular Macmillan titles disappeared from the Amazon site.

A separate lawsuit objecting to the pricing model was filed against Apple and the publishers last year. The plaintiffs alleged that they paid higher prices for their book purchases as a result of the agency model.

You can view the US v. Apple, et al ebook complaint here.

Meanwhile, Amazon is delighted with the prospect of being enabled to once again lower prices.

"[The settlement] is a big win for Kindle owners," Amazon said in a statement. "We look forward to being allowed to lower prices on more Kindle books."

Whether or not this will have any effect on the inflated book prices in Australia is unknown.


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