U.S. Files Suit Against Apple, Five Major Publishers for E-Book Price Hikes

By Ashok Bindra April 13, 2012

Wall Street Journal reported that on Wednesday, the United States Justice Department accused iPad maker Apple Inc., and five of the nation's largest publishers, of conspiring to raise e-book prices. Five defendants include Hachette Book Group, Schuster Inc., HarperCollins Publishers, Macmillan and Penguin Group (USA).

This is a case that could radically reorder the fast-growing business, according to WSJ reporters Thomas Catan, Jeffrey A. Trachtenberg and Chad Bray.

In this price fixing lawsuit, according to WSJ, the U.S. alleges the publishers’ chiefs met secretly in upscale Manhattan restaurants to hatch a plan to respond to the sharp discounting of their e-books by Amazon.com. “The executives also called and emailed each other to craft a solution to what one of them called ‘the wretched $9.99 price point,’” the source said.

In fact, according to the U.S. antitrust suit, “Apple and the five publishers hatched an arrangement that lifted the price of many best-selling e-books to $12.99 or $14.99,” wrote Catan, Trachtenberg and Bray.

"As a result of this alleged conspiracy,” quoted the WSJ report quotes attorney general Eric Holder, “we believe that consumers paid millions of dollars more for some of the most popular titles."

The publishers and Apple, however, have both denied any wrongdoing and said the government's actions could harm consumers by giving Amazon more control.

In the meantime, the report indicates that three of the five publishers have agreed for a settlement with the Justice Department, whereby they allow Amazon and other retailers to continue to discount of e-books. “Settlement of a separate suit filed by 16 states and U.S. territories could lead to tens of millions of dollars in restitution to consumers who bought e-books at the higher prices,” said WSJ.

Amazon has considered this settlement a victory for consumers and promised to renew discounting. The report suggests Amazon’s decision to continue discounting e-books will put pressure on rivals like Barnes & Noble, Inc.

However, Apple and two other publishers – Macmillan and Pearson PLC's Penguin Group (USA) – have rejected the government’s offer and are ready to fight in the court.




Edited by Braden Becker

TechZone360 Contributor

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