The US Department of Justice sues Apple over fixing eBook prices

The DoJ has sued Apple along with five major publishers for allegedly fixing prices for ebooks available through iBooks on various Apple devices.

Hachette, HarperCollins, Macmillian, Penguin and Simon & Schuster have all been targeted alongside Apple for entering into pricing agreements over how much to charge for ebooks.

Litigation is centered around the publishers attempt to incorporate the so-called Agency Model, where they are able to set ebook pricing, rather than the vendor (in this case, Apple). This prevents vendors from being able to purchase ebooks at wholesale prices, and then sell them at discounted rates, which is what allowed behemoths like Amazon and Barnes & Noble to dominate the market.

The agency model is all well and good until the publishers collude to set higher ebook prices, which is exactly what the DoJ case is about. The case outlines specific instances where the publishers met to allegedly determine ebook prices, and while Apple was not present at those meetings, they’re not exactly out of the woods. With Apple getting 30% of each ebook sold, as well as an assurance that each publisher would offer them their best price, the DoJ claims that they would have a vested interest in such a deal going through. The following is an excerpt from the official filing which the Department of Justice has released in PDF format, which we have linked below.

…Apple proposed that the Publisher Defendants require all retailers of their e-books to accept the agency model. Apple thereby sought to ensure that it would not have to compete on retail prices. The proposal appealed to the Publisher Defendants because wresting pricing control from Amazon and other e-book retailers would advance their collusive plan to raise retail e-book prices.

So far, three of the publishers have settled out of court, while Apple, Macmillan and Penguin are determined to contest the charges.

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