Three Book Publishers Settle with Dept of Justice; Apple, Two Other Publishers Face Suit

The Department of Justice announced that it has reached a settlement with three of the largest book publishers in the United States -- Hachette Book Group (USA), HarperCollins Publishers L.L.C. and Simon & Schuster -- and will continue to litigate against Apple and two other publishers -- Holtzbrinck Publishers LLC, which does business as Macmillan, and Penguin Group (USA) -- for conspiring to end e-book retailers’ freedom to compete on price, take control of pricing from e-book retailers and substantially increase the prices that consumers pay for e-books.

The department said that the publishers prevented retail price competition resulting in consumers paying millions of dollars more for their e-books. The civil antitrust lawsuit was filed in U.S. District Court for the Southern District of New York against Apple, Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department’s antitrust concerns with Hachette, HarperCollins and Simon & Schuster, and would require the companies to grant retailers -- such as Amazon and Barnes & Noble -- the freedom to reduce the prices of their e-book titles. The department’s Antitrust Division and the European Commission cooperated closely with each other throughout the course of their respective investigations, with frequent contact between the investigative staffs and the senior officials of the two agencies. The department also worked closely with the states of Connecticut and Texas to uncover the publishers’ illegal conspiracy.

According to the complaint, the five publishers and Apple were unhappy that competition among e-book sellers had reduced e-book prices and the retail profit margins of the book sellers to levels they thought were too low. To address these concerns, they worked together to enter into contracts that eliminated price competition among bookstores selling e-books, substantially increasing prices paid by consumers. Before the companies began their conspiracy, retailers regularly sold e-book versions of new releases and bestsellers for, as described by one of the publisher’s CEO, the “wretched $9.99 price point.” As a result of the conspiracy, consumers are now typically forced to pay $12.99, $14.99, or more for the most sought-after e-books, the department said.