Macmillan, Justice Department Settle E-Book Suit

[Techtaffy Newsdesk]

The Department of Justice has reached a settlement with Holtzbrinck Publishers, which does business as Macmillan.

The proposed settlement was filed in the U.S. District Court for the Southern District of New York. The department’s Antitrust Division previously settled its claims against four book publishers–Hachette Book Group, HarperCollins Publishers, Penguin Group (USA) and Simon & Schuster.

On April 11, 2012, the department filed a lawsuit against Apple and the five publishers alleging they conspired to eliminate retail price competition, resulting in consumers paying millions of dollars more for their e-books. The settlement with Hachette, HarperCollins and Simon & Schuster was approved by the court in September 2012.

The public comment period on the department’s settlement with Penguin will close on March 5, 2013. The trial against Apple is scheduled to begin in June 2013.

Jamillia Ferris (Chief of Staff and Counsel, Antitrust Division, Department of Justice):  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.

According to the 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 department said the companies worked together to raise retail e-book prices and eliminate price competition, substantially increasing prices paid by consumers.

According to the Justice Department, 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 said.

Under the proposed settlement agreement, Macmillan will immediately lift restrictions it has imposed on discounting and other promotions by e-book retailers and will be prohibited until December 2014 from entering into new agreements with similar restrictions. The proposed settlement agreement  will also impose an  antitrust compliance program on Macmillan, including requirements that it provide advance notification to the department of any e-book ventures it plans to undertake jointly with other publishers and regularly report to the department on any communications it has with other publishers. Also for five years, Macmillan will be forbidden from agreeing to any kind of most favored nation (MFN) provision that could undermine the effectiveness of the settlement.

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