It could be a fascinating anti-trust case according the details reported by The Wall Street Journal. The paper says that the Justice Department is gearing up to sue Apple and five top publishers — Simon & Schuster, Hachette, Penguin Group, Macmillan, and HarperCollins — for conspiring to fix e-book prices around 2010 when the tech company introduced its iPad. The group allegedly wanted to end Amazon’s practice of selling e-books for a deeply discounted $9.99, part of the company’s strategy to promote sales of its Kindle e-readers. Hoping to loosen Amazon’s grip on the market, and help its new iPad, Apple encouraged publishers to stop selling books wholesale — which enabled retailers to set the selling price– and to adopt a so-called “agency model.” That empowers publishers to set the sales price, and pay retailers a fee of about 30%. The late Apple CEO Steve Jobs told biographer Walter Isaacson that he told publishers “the customer pays a little more, but that’s what you want any way.” He added that publishers “went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books.’” The Journal says that Apple and the publishers denied that they conspired to raise prices; they said that they just wanted to promote competition. A settlement with the Justice Department may be in the works. But the publishers and Apple still might have to deal with anti-trust charges from the European Union, which is looking at e-book pricing, and class action suits. Yesterday Apple introduced an upgraded version of its iPad with a sharper screen, which CEO Tim Cook said would improve the reading experience.
By DAVID LIEBERMAN, Financial Editor | Thursday March 8, 2012 @ 3:11pm ESTTags: Amazon, Apple, E-Books, HarperCollins, iPad, Kindle, Simon & Schuster
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