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DOJ files e-book price-fixing lawsuit against Apple, publishers

The publishers feared Amazon.com's prices would set customer expectations for e-book prices, the DOJ says

The U.S. Department of Justice has filed an antitrust lawsuit against Apple and five large publishers, accusing the companies of working together to raise prices of e-books.

Defendants in the lawsuit, filed Wednesday, are Apple, Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin Group and Simon & Schuster. The six companies conspired to raise prices on e-books in retaliation to Amazon.com pricing most e-books at US$9.99 beginning in late 2007, the DOJ said in court documents. Hachette Book Group, HarperCollins and Simon & Schuster have agreed to settle the lawsuit, according to the Wall Street Journal.

The DOJ lawsuit seeks to invalidate alleged e-book pricing agreements between the publishers and Apple. Apple declined to comment on the lawsuit.

Beginning in late 2008, the publishers began meeting to discuss Amazon's pricing model, the lawsuit alleged. The publishers' CEOs met quarterly "in private dining rooms of upscale Manhattan restaurants" to discuss e-book pricing, the DOJ alleged.

In early 2010, publishers agreed to shift to a new pricing model where they set the prices for e-books, instead of retailers, the DOJ alleged. In an agreement with Apple, all new books would be priced at $12.99 to $16.99, the DOJ alleged.

Each publisher "knew that, acting alone, it could not compel Amazon to raise e-book prices and that it was not in its economic self-interest to attempt unilaterally to raise retail e-book prices," the DOJ said in its lawsuit.

The publishers "feared that lower retail prices for e-books might lead eventually to lower wholesale prices for e-books, lower prices for print books, or other consequences the publishers hoped to avoid," the DOJ said in court documents.

The European Union launched its own investigation of e-book pricing in December.

(More to follow.)

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.


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