It’s on — US sues Apple, publishers over e-book prices

6.7.2013 Fabian Rendon

The Justice Department has finally filed an anti-trust complaint in New York against Apple and five publishers over an alleged price fixing conspiracy. (Update: Hachette, Simon & Schuster and HarperCollins have agreed to settle, while Macmillan and — what is assumed — Penguin will fight the suit.)

The decision to sue comes after weeks of media leaks that indicated that the government was trying to force the belligerents into a settlement.

The issue has found its new axis on the case of whether five publishers illegally colluded with Apple to implement “agency pricing” in which the publishers set a figure and the retailer takes a certain commission.

Reports state that Attorney General Eric Holder and Connecticut Attorney General George Jepson will be overseeing a press conference in the afternoon today to announce details about a “significant antitrust case.”

The announcement will cap a flurry of speculation over the investigation. Some media reports said that two or three of the publishers were poised to reach a settlement while Apple and two publishers planned to dig in and fight the allegations.

The heart of the allegations turn on whether Apple acted as the hub of a conspiracy in which the publishers sought to freeze Amazon out of the e-book market unless it changed its pricing structure. Amazon had been using a wholesale model in which it bought books from the publishers and then charged what it liked.

Amazon often sold the e-books below cost in order to build market share and, in doing so, publishers believed it was setting an artificially low floor for prices.

Apple and the publishers are also facing a class action suit in which lawyers are seeking refunds for readers who overpaid for e-books as a result of the alleged conspiracy.

It’s rare for an antitrust investigation to actually reach court. Most investigations either disappear quietly or result in a so-called consent decree in which the parties agree to a set of conditions but don’t admit that they’re guilty.

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