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DOJ and 16 States Bring Price-Fixing Charges against Apple and Others
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15 states and the Commonwealth of Puerto Rico led by Texas and Connecticut filed a lawsuit on Wednesday against Apple and other book publishers for conspiring and fixing eBook prices. The DOJ has also filed a similar civil antitrust lawsuit in the Southern District of New York against Apple and the other publishers. Jepsen made the announcement at a news conference in Washington with U.S. Attorney General Eric Holder.

Attorney General George Jepsen of Connecticut disclosed that the antitrust lawsuit has been filed in a U.S. District Court in Texas alleging that Apple Inc. and publishing companies Macmillan Publishers Ltd., Penguin Group Inc and Simon & Schuster engaged in price-fixing in electronic books.

Two other publishers, Hachette Book Group, Inc. and HarperCollins Publishers LLC, have made settlements with the authorities and have agreed to provide consumer restitution.

  
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Jepsen said, “Publishers deserve to make money, but consumers deserve the price benefits of competition in an open and unrestricted marketplace … Those interests clearly collided in this case and we are going to work to ensure the eBook market is open once again to fair competition.”

Attorney General Eric Holder said “we believe that consumers paid millions of dollars more for some of the most popular titles.”

The lawsuit is the result of a two-year antitrust investigation by the U.S. Department of Justice’s Antitrust Division and the offices of the Connecticut and Texas Attorneys General.

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According to the lawsuit the effort to fix eBook prices coincided with Apple’s launch of the iPad. The authorities stated that the conspirators agreed that instead of selling books to retailers and allowing retailers to decide prices the publishers would set the retail prices. The conspiracy guaranteed Apple a 30 percent commission on each eBook sold through its platforms.

The authorities report Apple’s former CEO Steve Jobs had told the involved publishers “the customer pays a little more, but that’s what you want anyway.”



The European Union is conducting a parallel enquiry into the matter.

Apparently the joint effort was not only to bleed customers but to force Amazon.com into raising its 9.99 price point out of desperation and lack of access to bestsellers.

Connecticut Attorney General George Jepsen said that price markups on individual copies of books were as high as $5 and the total cost to consumers was more than $100 million since April 2010 when the scheme was implemented by the accused publishers.

Most of the accused publishers maintain that they have done nothing wrong but allowed incentives for a new player in the market, namely Apple to enter the market and break the monopoly held by Amazon.com. They allege that Amazon kept prices so low as to exclude the entry of strong competition in the market.



 

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