- N.C. math whiz to unveil secret of March Madness picks
- An appealing offer: Chiquita merges with Fyffes to make world’s largest banana firm
- Amnesty International says Syria guilty of war crimes for food blockade
- Mitch McConnell on beating tea party: ‘We are going to crush them’
- Adam Lanza’s dad: He would’ve killed me ‘in a heartbeat’
- North Korea holds election: 100% turnout, Kim Jong-un gets — 100% of vote
- Gentlemen, start your drones: Judge’s ruling opens door for commercial use
- Soldier who hid, bragged about not saluting flag to be punished — in secret
- ‘Maverick’ of the seas: ‘Top Gun’ school for U.S. ship officers to launch
- Putin declares Sochi Paralympics open amid Ukrainian protest
US sues Apple, publishers over e-book prices
WASHINGTON (AP) - The Justice Department and 15 states sued Apple Inc. and major book publishers Wednesday, alleging a conspiracy to raise the price of electronic books they said cost consumers more than $100 million in the past two years by adding $2 to $5 to the price of each e-book.
Attorney General Eric Holder said executives at the highest levels of the companies conspired to eliminate competition among e-book sellers. Justice’s antitrust chief Sharis Pozen said the executives were desperate to get Amazon.com, marketer of the Kindle e-book reader, to raise the $9.99 price point it had set for the most popular titles, which was substantially below their hardcover prices.
The federal government reached a settlement with three of the publishers, Hachette, HarperCollins and Simon & Shuster. But it will proceed with its lawsuit in federal court in New York City against Apple and Holtzbrinck Publishers, doing business as Macmillan, and The Penguin Publishing Co. Ltd., doing business as Penguin Group.
Connecticut and Texas, two of the 15 states filing a separate complaint, reached agreements with Hachette and HarperCollins to provide $52 million in restitution to consumers, using a formula based on the number of states participating and the number of e-books sold in each state. Other states in the case may sign onto the agreement.
Holder told a Justice Department news conference on Wednesday that “we believe that consumers paid millions of dollars more for some of the most popular titles” as a result of the alleged conspiracy. Pozen said the scheme added and average of $2 to $3 to the prices of individual books.
Connecticut Attorney General George Jepsen said the individual book markups went as high as $5 and the total cost to consumers was more than $100 million since April 2010, when the scheme allegedly took effect.
The lawsuit said the effort to get e-book prices reduced by Amazon.com came as Apple was preparing to launch the iPad. The government said the conspirators agreed that instead of selling books to retailers and letting them decide what retail price to charge, the publishers would convert the retailers into “agents” who could sell their books but not alter the publisher-set retail price. The scheme called for Apple to be guaranteed a 30 percent commission on each e-book it sold, the lawsuit said.
“To effectuate their conspiracy, the publisher defendants teamed up with defendant Apple, which shared the same goal of restraining retail price competition in the sale of e-books,” the lawsuit said.
Apple did not immediately respond to a comment request.
Macmillan Chief Executive Officer John Sargent said in a letter to authors, illustrators and agents that the company has not settled because it is “hard to settle a lawsuit when you know you have done no wrong.”
“But the terms the DOJ demanded were too onerous. After careful consideration, we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model,” he said. “We also felt the settlement the DOJ wanted to impose 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.”
At the heart of the e-book pricing debate is the industry’s ongoing concerns about Amazon. Publishers see the “agency model” as their best, short-term hope against preventing the online retailer from dominating the e-book market and driving down the price of books to a level unsustainable for publishers and booksellers.
TWT Video Picks
Taxpayers must pay the freight for over-budget train projects
- Kim Jong-un calls for execution of 33 Christians
- Rand Paul wins 2014 CPAC straw poll, Ted Cruz finishes a distant second
- Investigators puzzle: How does a 777 jetliner just disappear into thin air?
- Russia besieges Crimea as U.S. seeks diplomacy; Putin remains undeterred by Obama's sanctions
- As Crimea falls, Obama takes Key Largo golf vacation, Biden hits Virgin Islands
- Senate Democrats, Republicans spar over restoring unemployment benefits
- CURL: Today's GOP really is Reagan's 'Big Tent' party
- Adam Lanza's dad: He would've killed me 'in a heartbeat'
- Bill Clinton poses for photo with Bunny Ranch prostitutes
- U.S. pilot scares off Iranians with 'Top Gun'-worthy stunt: 'You really ought to go home'
Pope Francis meets his 'mini-me'
Celebrity deaths in 2014
Winter storm hits states — again