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Penguin settles DOJ lawsuit over alleged e-book price-fixing

Antitrust lawsuit accused Apple and five book publishers of conspiring to artificially hike prices. Now all but Apple and Macmillan have settled.

Steven Musil Night Editor / News
Steven Musil is the night news editor at CNET News. He's been hooked on tech since learning BASIC in the late '70s. When not cleaning up after his daughter and son, Steven can be found pedaling around the San Francisco Bay Area. Before joining CNET in 2000, Steven spent 10 years at various Bay Area newspapers.
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Steven Musil
2 min read

Penguin has become the latest book publisher to settle federal charges of e-book price-fixing, leaving only Apple and Macmillan to fight the Justice Department allegations.

In an antitrust lawsuit filed in April, federal prosecutors accused Apple and five book publishers of conspiring to artificially hike prices. The same day, the Justice Department announced it had reached settlements with three publishers but said Apple and the other two publishers had opted to fight the charges. Lagardere SCA's Hachette Book Group, News Corp.'s HarperCollins Publishers, and Simon & Schuster (owned by CBS, which publishes CNET) agreed to settle.

Penguin added its name to that group, the Justice Department announced today. As with the settlement to which the other settling publishers agreed, Penguin has agreed to terminate its existing contracts with Apple and not enter into new agreements for two years that would prevent retailers from offering discounted Penguin e-books, the Justice Department said.

The publisher issued a statement today confirming the agreement but maintained its innocence in the case:

Penguin confirms that it has reached an agreement with the U.S. Department of Justice to settle claims relating to the establishment of agency pricing agreements in 2010. Penguin has always maintained, and continues to maintain, that it has done nothing wrong and has no case to answer. Penguin continues to believe that the agency pricing model has encouraged competition among distributors of both e-books and e-book readers and, in the company's view, continues to operate in the interest of consumers and authors. But it is also in everyone's interests that the proposed Penguin Random House company should begin life with a clean sheet of paper.

Penguin's agreement still requires court approval, but the Justice Department said consumers are already benefiting from the previous settlements.

"Since the department's settlement with Hachette, HarperCollins, and Simon & Schuster, consumers are already paying lower prices for the e-book versions of many of those publishers' new releases and bestsellers," Jamillia Ferris, chief of staff and counsel at the Department of Justice's Antitrust Division, said in a statement. "If approved by the court, the proposed settlement with Penguin will be an important step toward undoing the harm caused by the publishers' anticompetitive conduct and restoring retail price competition so consumers can pay lower prices for Penguin's e-books."

CNET has contacted Apple for comment regarding Penguin's settlement and will update this report when we learn more. In a legal memo filed in August, Apple called the previous settlements "fundamentally unfair, unlawful, and unprecedented." The case against Apple and Macmillan is scheduled to begin next June.

Penguin's settlement comes a few weeks after Apple reportedly negotiated a deal with European regulators that will help the company avoid litigation for potential antitrust violations while also enabling Amazon to offer lower prices than offered at Apple's iBookstore. Terms of that alleged deal were not revealed.