The Wall Street Journal reported that the Justice Department has warned Apple and Penguin, Hachette Book Group, Macmillan, HarperCollins and Simon & Schuster that it plans to sue them for allegedly colluding to raise the price of electronic books by adopting the agency pricing model. The DoJ has been investigating the issue for months.
According to the Journal report, several of the parties have held talks to settle the antitrust case and head off a court battle, but that no agreements had been reached yet. As outlined by the Journal, the DoJ complaint follows closely to the amended complaint filed in January byHagens Berman, the law firm heading up the class action against Apple and the five publishers (both actions exclude Random House who did not begin using the agency modelfor months after the other five adopted the plan). The crux of both complaints is familiar--that the major publishers, worried that Amazon’s $9.99 price for e-books would quickly erode the market for print books--conspired with Apple to introduce the agency model to stabilize pricing.
The Journal said the Justice Department believes that Apple and the publishers did act in concert to raise prices across the industry, and is prepared to sue them for violating federal antitrust laws. According to the Journal, publishers told investigators “that the shift to agency pricing enhanced competition in the industry by allowing more electronic booksellers to thrive.” A representative at one of the Big Six companies noted to PW that the e-book industry has grown rapidly since the agency model was put into place by allowing more e-tailers into the market, but the Journal says lawyers for the Justice Department aren’t persuaded by the argument that the agency model has increased competition since prices went up.