Apple named in e-book price-fixing lawsuit
Lawsuit accuses Apple and a group of book publishers of conspiring to fix prices to boost profits and put pressure on Amazon.
Apple and a group of book publishers were accused in a lawsuit today of illegally fixing e-book prices to "boost profits and force e-book rival Amazon to abandon its pro-consumer discount pricing."
The lawsuit (PDF), which was filed today in U.S. District Court in Northern California, alleges Apple, 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 lawsuit alleges Apple and the book publishers employed 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 plaintiffs, listed in the lawsuit as Anthony Petru of Oakland, Calif., and Marcus Mathis of Natchez, Miss., purchased at least one e-book title for $9.99, allegedly paying higher prices as a result of the agency model. The lawsuit, which has applied for class action status, seeks restitution and damages to parties included in the suit, as well as declarations that the defendants' conduct constituted a conspiracy and that the agency pricing formula is illegal.
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"Fortunately for the publishers, they had a co-conspirator as terrified as they were over Amazon's popularity and pricing structure, and that was Apple," Steve Berman, an attorney for the firm representing the plaintiffs, said in a statement. "We intend to prove that Apple needed a way to neutralize Amazon's Kindle before its popularity could challenge the upcoming introduction of the iPad, a device Apple intended to compete as an e-reader."
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.
Apple representatives did not immediately respond to a request for comment.