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The U.S. Department of Justice has followed through on its threat to sue Apple and five major U.S. publishers for allegedly conspiring to drive up the prices of electronic books.
The DOJ filed an antitrust lawsuit against Apple, Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster in New York district court, claiming collusion over e-book pricing.
According to the government, the companies conspired to block out rivals such as Amazon from offering cheaper e-books. This was allegedly accomplished by adopting an “agency model” in 2010 that allowed publishers to set the price of e-books and, in turn, allowed Apple to take a 30-percent cut. The model was adopted around the time that Apple launched the iPad, and the agreement effectively barred publishers from allowing rival retailers to sell the same books offered on the iPad at lower prices. Before then, competitors like Amazon and Barnes & Noble used a “wholesale model” and generally charged $9.99 for digital books. After Apple entered the game, the price of e-books rose by 30 to 40 percent.
The Los Angeles Times reports that Simon & Schuster, Hachette and HarperCollins are seeking to avoid a costly legal battle and could settle as soon as today. However, Apple and Macmillan have refused to engage in settlement talks and deny they conspired to raise the prices for digital books. Penguin Group is also preparing to fight the DOJ if necessary, the LA Times says.
The Justice Department said it would announce an “unspecified” antitrust settlement today.
We’ll keep you updated on the settlement negotiations, as they may affect several class action lawsuits currently pending against Apple and the publishers over the same antitrust allegations.
UPDATE 1: Apple Inc. announced June 16, 2014, that it had reached an undisclosed class action lawsuit settlement in the e-book antitrust litigation.
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UPDATE 1: Apple Inc. announced June 16, 2014, that it had reached an undisclosed class action lawsuit settlement in the e-book antitrust litigation.