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Justice Dept. Sues Apple and Major E-Book Companies for Alleged Price-Fixing Conspiracy


On Wednesday, the Justice Department and 15 states sued Apple Inc. and major book publishers for allegedly price-fixing e-books, which violates Section 1 of the Sherman Antitrust Act.  The Antitrust Primerfrom the Department of Justice website states:

Price fixing, bid rigging, and market allocation are generally prosecuted criminally because they have been found to be unambiguously harmful, that is, per se illegal. Such agreements have been shown to defraud consumers and unquestionably raise prices or restrict output without creating any plausible offsetting benefit to consumers, unlike other business conduct that may be the subject of civil lawsuits by the federal government.

The DOJ reached a settlement with three of the major publishers, Hachette Book Group (USA), HarperCollins Publishers L.L.C. and Simon & Schuster Inc. on Wednesday, but will continue its federal lawsuit against Apple Inc., Holtzbrink Publishers (Macmillan), and The Penguin Publishing Co. Ltd. (Penguin Group) for the alleged conspiracy and exploitation of e-book consumers.  

According to the DOJ antitrust chief Sharis Pozen, Steve Jobs, the late Apple CEO, told book publishers that "the customer pays a little more, but that's what you want anyway."

Macmillan Chief Executive Officer John Sargent, one of the alleged conspirators, spoke in his company’s defense:

The terms the DOJ demanded were too onerous...we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position.  The settlement the DOJ wanted to impose would have a very negative and long term impact on those who sell books for a living, from the largest chain stores to the smallest independents.

The Huffington Post reported that, according to court papers:

The settlement agreement reached with three publishers said the companies agreed that for two years they will not restrict, limit or impede an e-book retailer's ability to set, alter or reduce the retail price of any electronic book.  The agreement also calls for the defendants not to enter into any agreement or conspiracy with any electronic-book publisher to raise, stabilize, fix, set or coordinate the retail price or wholesale price of any electronic book.

Read more here.

AlterNet / By Angela Lee

Posted at April 11, 2012, 11:35am