Bloomberg News

Ohio, Texas, Maryland Reach $69 Million E-Books Deal

August 29, 2012

States including Maryland, Ohio and Texas said they reached a $69 million settlement with three U.S. publishers over alleged price-fixing for electronic books.

The agreements were made with Hachette Book Group, HarperCollins Publishers LLC and Simon & Schuster Inc., according to statements from attorneys general in states also including Colorado and Florida. The settlement, which must be approved by a federal judge in New York, couldn’t be confirmed in court records.

“Unlawful collusion and price-fixing not only violates antitrust laws, it is anti-competitive and inconsistent with the free market approach that is critical to our economy,” Texas Attorney General Greg Abbott said in a statement. “Today’s settlements provide refunds to customers who paid artificially inflated prices for e-books.”

The U.S. sued Apple Inc. (AAPL:US) and the five publishers in April, charging that the defendants conspired to limit e-book price competition. The government said that the defendants sought to raise e-book prices “significantly higher” than the $9.99 level at which they were selling.

The publishers viewed online retailer Amazon.com’s (AMZN:US) discounted prices on e-books a “substantial challenge to their traditional business model,” according to the complaint. At that time, Apple was preparing to introduce its iPad electronic tablet and considering whether to sell e-books for the device, the U.S. said in its court filing.

Different Model

To carry out the conspiracy, the U.S. said, the publishers and Apple agreed to set up a different model for pricing, under which retailers wouldn’t have the power to change prices set by publishers. Apple would receive a 30 percent commission on digital books sold, the complaint states.

Florida Attorney General Pam Bondi said in a statement that the settlement “will repay consumers affected by price-fixing scheme and will restore competition in the electronic book market.”

She said about 97 percent of consumers will get notice of the settlement by e-mail.

In addition to Florida, 54 attorneys general in other states, districts and U.S. territories joined in the settlement.

At a hearing in New York federal court in June, Connecticut Assistant Attorney General Gary Becker told U.S. District Judge Denise Cote that a settlement among the three publishers and the states would be agreed to by August.

In a letter dated Aug. 14 to the judge, Doreen Johnson, of the antitrust section of Ohio Attorney General Mike DeWine’s office, said a motion for preliminary approval of the settlement would be filed in federal court by today.

The lawsuit against Apple and the publishers Macmillan and Penguin Group remains in effect, according to the statement from Texas.

The case is U.S. v. Apple, 12-cv-02826, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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