Antitrust Law Daily Wrap Up, TOP STORY—Fifth E-Book Publisher Settles Justice Department’s Price Fixing Suit, (Feb 8, 2013)

The Department of Justice announced today that it has secured another settlement in its ongoing enforcement suit accusing Apple Inc. and five of the U.S.’s largest book publishers of conspiring to raise e-book prices to consumers in violation of federal antitrust law. All five publishers have now agreed to settle the claims, leaving litigation ongoing only against Apple. That case is scheduled for trial in June.

The proposed settlement , which was filed in federal district court in New York City, would require Holtzbrinck Publishers, LLC (which does business as Macmillan) to immediately lift restrictions it has imposed on discounting and other promotions by e-book retailers and would impose a strong antitrust compliance program upon the company. Holtzbrinck would be prohibited from entering into new agreements with similar restrictions until December 2014, and forbidden from agreeing to “any kind of most favored nation provision that could undermine the effectiveness of the settlement,” according to the Antitrust Division.

"As a result of today's settlement, Macmillan has agreed to immediately allow retailers to lower the prices consumers pay for Macmillan's e-books," said Jamillia Ferris, Chief of Staff and Counsel at the Department of Justice's Antitrust Division. "Just as consumers are already paying lower prices for the e-book versions of many of Hachette's, HarperCollins' and Simon & Schuster's new releases and best sellers, we expect the prices of many of Macmillan's e-books will also decline.

According to the government’s April 2012 complaint, the five publishers and Apple were unhappy that competition among e-book sellers had reduced e-book prices and the retail profit margins of the book sellers to levels they thought were too low. To address these concerns, the Justice Department said the companies worked together to raise retail e-book prices and eliminate price competition, substantially increasing prices paid by consumers. Before the companies began their conspiracy, retailers regularly sold e-book versions of new releases and bestsellers for, as described by one of the publisher's CEO, the “wretched $9.99 price point.” As a result of the conspiracy, consumers were typically forced to pay $12.99, $14.99 or more for the most sought after e-books, the Department asserted.

The Antitrust Division settled its claims against three of the other four book publishers–Hachette Book Group Inc., HarperCollins Publishers L.L.C., and Simon & Schuster Inc.—last year, and the public comment period on its proposed settlement with Penguin Group (USA) Inc. is set to expire on March 5, 2013.

Upon upcoming publication of the proposed settlement and a competitive impact statement in the Federal Register, written comments on the settlement will be accepted from the public for 60 days. Send comments to: John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., 4th Floor, Washington, D.C. 20530.

The case is Civil Action No. 1:12-CV-2826 (DLC).

Attorneys: John R. Read, U.S. Department of Justice, Antitrust Division, for the United States of America. Joel M. Mitnick (Sidley Austin LLP) for Holtzbrinck Publishers, LLC.

Companies: Hachette Book Group Inc.; HarperCollins Publishers L.L.C.; Simon & Schuster Inc.; Penguin Group (USA) Inc.; Holtzbrinck Publishers, LLC; Apple Inc.

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