The DOJ Sues Apple, Book Publishers for Price Fixing
We all knew this was coming. The department of Justice as sued the ‘Big Five’ book publishers and Apple for price fixing. Specifically, the case names Apple, Hachette, HarperCollins, Macmillian, Penguin and Simon & Schuster. The case centers around the decision by the booksellers to switch to the Agency model, where all resellers have to agree to the same terms.
In this case, the terms were to receive a 30% cut of the profits, but to not be able to set their own book price. Amazon preferred the wholesale model, where book retailers sold their books and then Amazon set the price. That let them mark the price of bestsellers below the rate that the books go for in print, which terrified publishers.
Apparently, the Agency pricing that the booksellers prefer runs foul of price fixing laws, probably not helped by the fact that the booksellers gave Apple special considerations in the deal. Apple’s “favored nation” status has since been revoked, but not before drawing the eye of the justice system.
The Department of Justice has already settled with Simon & Schuster, Hachette Book Group and HarperCollins. They reached a deal less than a day after the filing, meaning that they knew the suit was coming. The terms haven’t been published, but we can only hope that they are good for us. Hopefully this means that the publishers knew their legal position was tenuous, and that agency pricing is done with those book publishers. We still have several more companies to hear from, however.
The Department of Justice has published the entire filing online. It’s interesting reading, if you’re of a legal mindset. Feel free to draw your own conclusions about the suit.
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