In its response to recent filings from Apple, publishers and booksellers on its proposed ebook settlement with three publishers, the Department of Justice addresses few specific complaints, but says there’s “unmistakable consumer harm that has resulted from the conspiracy in this case,” reports “paid.content” (http://macte.ch/lbi81). The DOJ asks Judge Denise Cote to approve the settlement without a hearing.
The DOJ pooh-poohs the argument that ebooks are different from print books, “but doesn’t elaborate on why they are the same (and doesn’t respond to the criticism that it has failed to take interrelated markets, like those for e-readers, into account),” notes “paid.content.” Rather, it says, “Railroads, publishers, lawyers, construction engineers, health care providers, and oil companies are just some of the voices that have raised cries against ‘ruinous competition’ over the decades,” and publishers should not be granted special treatment.”
On the flip side, last week Apple said in a legal memo (http://macte.ch/7tHOw) that the DOJ’s April ebook price fixing settlement with three publishers is “fundamentally unfair, unlawful, and unprecedented.”
The first paragraph of the memo reads this way: “Apple has not settled with the Government; it denies the allegations against it and is actively defending this case. Apple has never participated in, encouraged, or sought to benefit from collusion. It has no objection to the Proposed Judgment’s bar on collusion. But the Government proposes to go much further. It seeks to terminate and rewrite Apple’s bargained-for contracts before a single document has been introduced into evidence, before any witness has testified, and before the Court has resolved the disputed facts. Once its existing contracts are terminated, Apple could not simply reinstate them after prevailing at trial. The Court’s decision would be irreversible. Nullifying a non-settling defendant’s negotiated contract rights by another’s settlement is fundamentally unfair, unlawful, and unprecedented. The Government does not cite a single case in which such relief was granted without a trial or merits determination.”
In April the United States Department of Justice filed an antitrust lawsuit against Apple, Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster in New York district court, claiming collusion over ebook pricing. Apple and Macmillan, which have refused to engage in settlement talks with the Justice Department, deny they colluded to raise prices for digital books.
The brouhaha centers on Apple’s move to change the way that publishers charged for e-books as it prepared to introduce its first iPad in 2010. Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that “wholesale model,” booksellers were then free to offer those books to customers for less than the cover price if they wished.
Apple suggested moving to an “agency model,” under which the publishers would set the price of the book and Apple would take a 30% cut. However, Apple also insisted that publishers couldn’t let rival retailers sell the same book at a lower price.
Apple has publicly rejected charges that it conspired to fix prices of electronic books, calling the U.S. government’s antitrust lawsuit a “fundamentally flawed” endeavor that could discourage competition and harm consumers. In a filing in U.S. District Court in Manhattan earlier this year, Apple said it didn’t conspire with anyone or fix prices for e-books to thwart Amazon’s dominance of that market, the article adds. In fact, the company says its entry into the book market has actually fueled demand for ebooks by forcing Amazon and rivals, including Barnes & Noble Inc, to compete more aggressively, including by upgrading e-reader technology.
