Justice Department investigating e-book pricing

Feds confirm a e-book pricing probe of Apple and publishers after an EU investigation goes public.

The U.S. Department of Justice is investigating allegations that Apple and a group of publishers colluded on e-book pricing, the Wall Street Journal reported.

"We are also investigating the electronic book industry, along with the European Commission and the states attorneys general," Sharis Pozen, acting antitrust chief at the Justice Department, said at a congressional hearing in the agency's first public confirmation of the investigation.

Apple declined to comment on the matter.

The European Commission cited Apple , which sells iBooks, and five publishers yesterday in a probe into alleged anti-competitive practices in Europe. Apple and the publishers were also named as defendants in a lawsuit filed in August over their use of the "agency model" pricing system whereby publishers set the prices.

When "agency pricing," which Apple introduced with the iPad last year, became industry practice, it resulted in a price increase in the books and effectively ended Amazon's ability to offer sharp discounts, the newspaper reports.

In addition to Apple, the EU said it was investigating Hachette Livre, owned by Lagardere SCA; HarperCollins Publishers Inc., which is owned by News Corp. (owner of the Wall Street Journal); Simon & Schuster; Pearson PLC's Penguin; and Verlagsgruppe Georg von Holzbrinck. (Disclosure: Both Simon & Schuster and CNET News are owned by CBS.)

A Hachette spokeswoman told the WSJ that the company "feels strongly that its decision to distribute e-books through agency distribution not only better serves our authors and customers, it has also helped to increase competition and consumer choice in e-books and devices."

Meanwhile, a HarperCollins spokeswoman said the company is "cooperating with the investigation."

Updated 3:45 p.m. PT with Apple declining comment.

 

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