In a move that had been expected since the announcement of the Penguin-Random House merger, Penguin Group (USA) has reached a settlement with the Department of Justice in the government's e-book price fixing lawsuit. Terms are nearly identical to agreements reached with Simon & Schuster, Hachette and HarperCollins, but according to the government, if the Random House-Penguin merger is approved the newly formed company must abide by the agreement.
“The department is currently reviewing the proposed joint venture announced by Penguin and Random House Inc., the largest U.S. book publisher. Should the proposed joint venture proceed to consummation, the terms of Penguin’s settlement will apply to it,” the DoJ said in its press release. Until the merger is approved and finalized, Random House, which was not involved in the DoJ suit, is free to continue to sell its e-books under the agency agreement. According to court documents, once the merger is completed, Penguin Random House will have 30 days to meet the obligations agreed to by Penguin. However, in terms of the expiration of settlement terms, the clock starts ticking for the merged companies when the final judgment kicks in for Penguin, “as if the acquisition, combination, or other relationship had not occurred.” Thus, Random House will not be subject to the full term of sanctions dictated by the agreement, but only for the balance of the period remaining following the merger’s completion.
In a prepared statement, Penguin said it maintains that is has “done nothing wrong,” in its implementation of the agency model, but that it is “in everyone's interests that the proposed Penguin Random House company should begin life with a clean sheet of paper.”
Under the proposed agreement, which still must be approved by the court after a 60-day comment period, Penguin will terminate its agreements with Apple and other e-books retailers and will be prohibited for two years from entering into new agreements that constrain retailers’ ability to offer discounts or other promotions to consumers. The proposed settlement agreement also will impose an antitrust compliance program on Penguin, which will include a requirement that it provide advance notification to the department of any e-book ventures it plans to undertake jointly with other publishers and that it regularly report to the department on any communications it has with other publishers. Also for five years, Penguin will be forbidden from agreeing to any kind of most favored nation agreement that could undermine the effectiveness of the settlement.
The Penguin deal leaves only Apple and Macmillan still fighting the DoJ charges with a trial set for next June.