The US on Wednesday hit Apple Inc. and five of the nation's largest publishers with an antitrust lawsuit over the fast-growing e-book market, alleging they conspired to raise prices and block Amazon.com Inc. from selling e-books at $9.99.
Three of the publishers settled the US suit and agreed to let Amazon and other retailers set the consumer price of e-books, upending the model that had led the price of many best-selling e-books to rise to $12.99 or $14.99. A separate settlement with states could lead to tens of millions of dollars in restitution to consumers who bought e-books.
Attorney General Eric Holder unveiled the federal suit at a Washington news conference. "As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles," he said.
Some publishers hit back at the allegations, saying they did nothing wrong and were acting to prevent Amazon from taking a dominant position in e-book retailing.
CEO John Sargent of Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, denied collusion and said he rejected the government's settlement proposal because it could enable Amazon to "recover the monopoly position it had been building." He also said that a settlement "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."
Amazon hailed the settlement as a victory for consumers and users of its Kindle e-reading device. "We look forward to being allowed to lower prices on more Kindle books," Amazon said.
Apple declined to comment.
The government's lawsuit, filed in Manhattan federal court, described CEO-only meetings of publishers at which the alleged conspiracy was hashed out. The suit alleged that the publishers' chief executives met starting in September 2008 or earlier "in private dining rooms of upscale Manhattan restaurants" and "no legal counsel was present at any of these meetings."
The suit describes the shift from the traditional "wholesale" pricing model, under which retailers set the price of both electronic and physical books, to an "agency" model under which publishers set the price and retailers take a commission.
By 2009, many publishers were increasingly angered at Amazon's decision to price many newly released and best-selling e-books at $9.99. Publishers feared that would set price expectations in many consumers' minds and make it difficult to charge more in the future. Apple's introduction of the iPad triggered a shift to the agency pricing model, under which Apple took a 30-percent commission on books it sold for the popular tablet.
The three publishers that agreed to settle are Lagardere SCA's Hachette Book Group, CBS Corp.'s Simon & Schuster Inc. and News Corp.'s HarperCollins Publishers Inc. News Corp. also owns The Wall Street Journal and NewsCore.
Those three publishers agreed to terminate their agreements with Apple regarding e-books and refrain from limiting any retailer's ability to set e-book prices for two years. That could help Amazon resume deep discounts on new e-books.
To read more, go to The Wall Street Journal
Amazon, Apple, Amazon.com Inc., Verlagsgruppe Georg von Holtzbrinck, Kindle books, Apple, consumers, Eric Holder
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