A nationwide class-action lawsuit claims that Apple Inc. and five of the nation’s top publishers have colluded to illegally fix the prices of e-books in order to keep the prices high.
The suit names HarperCollins Publishers, Hachette Book Group, Macmillan Publishers, Penguin Group Inc. and Simon & Schuster Inc. It was filed in the U.S. District Court for the Northern District of California by consumer rights class-action law firm Hagens Berman.
Among its primary claims, the suit contends that these companies banded together to protect themselves against Amazon’s Kindle e-reader and Amazon’s discounted pricing structure, in order to prevent consumers from expecting lower prices for all e-books.
The complaint claims that the five publishing houses forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices, thus preventing Amazon or others from offering lower prices on e-books. Apple already had such a model in place, taking 30 percent revenue on sales while the publishers receive 70 percent.
Hagens Berman points to a 2010 interview Steve Jobs gave to The Wall Street Journal in which the Apple CEO was asked why consumers would buy books through Apple at $14.99 while Amazon was selling the same book for $9.99. “The prices will be the same,” he replied, according to the filing.
“While free market forces would dictate that e-books would be cheaper than their hard-copy counterparts, considering lower production and distribution costs, the complaint shows that as a result of the agency model and alleged collusion, many e-books are more expensive than their hard-copy counterparts, the complain states, adding that the prices of e-books have risen as much as 50 percent since the switch to an agency model.
The lawsuit claims Apple and the publishers are in violation of a variety of federal and state antitrust laws, the Sherman Act, the Cartwright Act and the Unfair Competition Act. If approved, the suit seeks damages for the purchase of e-books, an injunction against pricing e-books with the agency model, and forfeiture of the illegal profits received by the defendants as a result of their anticompetitive conduct, which could total tens of millions of dollars.
Thanks to GigaOm for the tip.
Publishing Perspectives post – http://tinyurl.com/3njghal
Hagens Berman’s filing (PDF) – http://tinyurl.com/3zub29k
Photo by flickr user Cloned Milkmen, used under Creative Commons license