Apple, book publishers face e-book antitrust lawsuit

Justice Department alleges the group colluded to fix prices on electronic books, sources tell The Wall Street Journal.

Sarah Tew/CNET

The U.S. Justice Department plans to sue Apple and five U.S. publishers for alleged price-fixing on e-books, according to The Wall Street Journal.

Several of the parties expected to be named as defendants have already begun discussions with regulators to head off an expensive antitrust court battle, the newspaper reported, citing sources familiar with the matter. Such a settlement would likely have a ripple effect for the industry, however not every publisher is engaged in the settlement discussions, they cautioned.

Apple did not immediately respond to a request for comment.

The publishers expected to be named in the lawsuit are HarperCollins Publishers, Hachette Book Group, Macmillan Publishers, Penguin Group, and Simon & Schuster "colluded to increase prices" on popular books. (Simon & Schuster is owned by CBS. CNET News is published by CBS Interactive, a unit of CBS.)

The action is apparently based on changes made to how publishers charge for e-books when Apple released the first iPad two years ago. Book publishers began using an "agency model" in which publishers set their own e-book prices, rather than the traditional wholesale model in which publishers set a retail price and retailers set their own sales price.

The pricing model materialized in 2010 after book publishers asked Amazon to increase the price of e-books on its Web site, but Amazon stood firm in its contention that anything above $9.99 was too high. Amazon eventually relented after many popular Macmillan titles disappeared from the e-tailer's site.

A lawsuit objecting to the pricing model was filed against Apple and the publishers last year. The plaintiffs alleged that they paid higher prices for their book purchases as a result of the agency model.

 

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