THE US Department of Justice sued Apple and five of the world’s largest book publishers yesterday, alleging they had colluded to raise ebook prices and cost consumers “tens of millions of dollars”.
The complaint, filed in New York, alleges Apple and publishing executives agreed on a common response to Amazon’s pricing policy over phone calls, emails and meals in the “dining rooms of upscale Manhattan restaurants”. Amazon, which had challenged the industry with a maximum ebook price of $9.99 (€7.62), is not named as a defendant.
The publishers named are Hachette Book Group, part of Lagardère; HarperCollins, owned by News Corp; Holtzbrinck, owner of Macmillan; Simon Schuster, a CBS subsidiary; and Penguin, owned by Pearson, the parent company of the Financial Times.
The department alleged Apple and the publishers raised the price of best-selling titles by $2 to $5 each by introducing, at the same time as Apple launched its iPad tablet, an “agency” business model in which publishers set retail prices. Apple’s insistence on a “most favoured nation” clause in which publishers agreed not to sell on cheaper terms elsewhere – while giving Apple a 30 per cent commission on every sale – forced other retailers to adopt the same terms, the department added.
“Executives at the highest levels of the companies included in today’s lawsuits, concerned that ebook sellers had reduced prices, worked together to eliminate competition among stores selling ebooks, ultimately increasing prices for consumers,” said Eric Holder, US attorney general.
Hachette, HarperCollins and Simon Schuster settled with the department, leaving Apple, Macmillan and Penguin to fight in court. Not all the publishers were available for comment, but previously denied conspiring to raise prices and argue the “agency” model promoted competition by challenging Amazon’s dominance.
The US suit claims Steve Jobs, Apple’s late chief executive, personally facilitated the agency model. “Apple clearly understood that its participation in this scheme would result in higher prices to consumers,” the suit says. An Apple spokesman declined to comment. – (Copyright The Financial Times Limited 2012)
