Wednesday, April 11, 2012

DOJ Issues Antitrust Charges Against Apple, Settles With Publishers In e-book Price Fixing Case

The U.S. Department of Justice (DOJ) has confirmed the filling of an antitrust lawsuit against Apple and two additional leading publishers – for conspiring to increase the prices that consumers pay for e-books. (alleged e-book price fixing)

Apple and five publishers have been part of an ongoing DOJ investigation into their practices involving pricing and sales. The DOJ alleges that the companies colluded in anti-competitive practices artificially keeping prices high. Today's charges come as a result of the year-long investigation into the matter after Apple switched to an “agency” model where they retained a portion of the sale of e-books sold through its platforms.

This is said to have resulted in higher prices industry-wide, since the power to set prices rested in the hands of only a few sellers.

"We allege that executives at the highest levels of the companies included in today's lawsuit -- concerned that e-book sellers had reduced prices -- worked together to eliminate competition among stores selling e-books, ultimately increasing prices for consumers," Attorney General Eric Holder said during a press conference. "As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles."

Simon & Schuster, Lagardère SCA’s Hachette Book Group and HarperCollins, whom were originally part of the investigation, settled with the DOJ just prior to the lawsuit being filed. Leaving only Macmillan and Penguin to stand next to Apple in the case. If the settlement is approved by the court, this settlement would resolve the publishers antitrust concerns raised by the DOJ and would require them to grant retailers – such as Amazon and Barnes & Noble – the freedom to reduce the prices of their e-book titles.

The settlement also requires the companies to terminate their anti-competitive most-favored-nation agreements with Apple and other e-books retailers. In addition, the companies will be prohibited for two years from placing constraints on retailers’ ability to offer discounts to consumers. They will also be prohibited from conspiring or sharing competitively sensitive information with their competitors for five years. And each is required to implement a strong antitrust compliance program. These steps are appropriate – and essential in ensuring a competitive marketplace.

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