DOJ, Conn. sue Apple over e-book pricing

U.S. Attorney General Eric Holder, Connecticut and 15 other states sued Apple Inc. and two publishers over e-book pricing, while reaching settlements with three other publishers.

Hachette Book Group, HarperCollins Publishers L.L.C. and Simon & Schuster Inc. agreed to a settlement with the Department of Justice in a lawsuit filed April 11 in the U.S. District Court for the Southern District of New York.

Antitrust suits will proceed against Apple, Penguin Group USA and MacMillan parent Holtzbrinck Publishers L.L.C.

All five publishers are based in New York City. The state of New York was not listed as a plaintiff in the lawsuits and settlements.

At an April 11 press conference in Washington, D.C., DOJ officials credited Connecticut Attorney General George Jepsen for his role in the investigation.

Jepsen is co-chair of the antitrust committee for the National Association of Attorneys General.

Unhappy in 2009 that competition among e-book sellers had reduced prices and profit margins, the DOJ lawsuit claims publishing house CEOs began meeting in Manhattan each quarter to find ways to eliminate price competition among bookstores selling e-books.

“Agreements between companies that are reached unilaterally are legal and appropriate,” said Sharis Pozen, acting U.S. assistant attorney general. “However, let me be clear ”“ when companies get together and conspire to enter into agreements that eliminate price competition, it crosses the line. This kind of agreement is illegal and anti-competitive.”

Before the alleged conspiracy began, retailers regularly sold e-book versions of new releases and bestsellers for “the “wretched $9.99 price point,” in the words of one CEO whom DOJ did not identify by name in a press release.

DOJ says the publishers also agreed to pay Apple a 30 percent commission for each e-book purchased through its iBookstore and promised that no other e-book retailer would sell an e-book title at a lower price than Apple.

The companies”™ alleged conspiracy, the lawsuit claims, resulted in consumers being forced to pay several dollars more for the most popular e-books.

Under the settlement agreement – subject to court approval – Hachette, HarperCollins and Simon & Schuster will terminate their agreements with Apple and other e-book retailers, and will take several other steps to free up price competition while strengthening their compliance with antitrust law.