Apple all alone in eBook price fixing probe

Apple Corp. is now the lone company facing litigation by the United States Department of Justice (DOJ) for alleged involvement in a conspiracy to raise the price of eBooks, following the decision on Friday of book publisher MacMillan to sign an agreement with the government to avoid further investigation.

The settlement requires MacMillan to allow eBook retailers to begin discounting eBook prices within three business days. The settlement filed by MacMillan and the DOJ still requires a judge’s approval from the District Court in Manhattan.

MacMillan had to settle because penalties have become too high to risk the possibility of an unfavourable decision by the court, according to John Sargent, the company’s chief executive. He contents, his company did nothing wrong.

Three publishers, Hachette Book Group, HarperCollins, and Simon & Shuster settled almost immediately following the DOJ’s allegations early last year while Pearson Plc and Penguin Group settled in December.

Apple has denied the charges and has so far not indicated whether or not it plans to settle.

Apple and the five publishers were accused by the DOJ of colluding to raise eBook prices in order to counter Amazon.com Inc.’s low-margin wholesale eBook marketing model. The agreement allegedly took place ahead of the launch of the iPad in 2010 and as Amazon’s drove eBook prices down to $9.99 for newly released and bestselling titles.

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“Apple facilitated the Publisher Defendant’s collective effort to end retail price competition by coordinating their transition to an agency model across all retailers,” the complaint filed before the court said. “Apple clearly understood that its participation in this scheme would result in higher prices to consumers.”

In January 2010, the DOJ said, the publishers entered into identical contracts with Apple. Under the agreement electronic versions books were priced in tiers. For example the eBook versions of bestsellers and new releases with hardcover prices of $25 to $35 were priced at $12.99 or $14.99 or $16.99.

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