As predicted, the US Department of Justice has filed an antitrust lawsuit against Apple and five large publishers, accusing the companies of working together to raise prices of ebooks.
Defendants in the lawsuit, filed on Wednesday evening, are Apple, Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin Group and Simon & Schuster. The six companies conspired to raise prices on ebooks in retaliation to Amazon.com pricing most ebooks at US$9.99 beginning in late 2007, the DOJ said in court documents. Hachette Book Group, HarperCollins and Simon & Schuster have agreed to settle the lawsuit, according to the Wall Street Journal.
The DOJ lawsuit seeks to invalidate alleged ebook pricing agreements between the publishers and Apple. An Apple representative wasn’t immediately available for comment.
Beginning in late 2008, the publishers began meeting to discuss Amazon’s pricing model, the lawsuit alleged. The publishers’ CEOs met quarterly “in private dining rooms of upscale Manhattan restaurants” to discuss ebook pricing, the DOJ alleged.
In early 2010, publishers agreed to shift to a new pricing model where they set the prices for ebooks, instead of retailers, the DOJ alleged. In an agreement with Apple, all new books would be priced at $12.99 to $16.99, the DOJ alleged.
Each publisher “knew that, acting alone, it could not compel Amazon to raise ebook prices and that it was not in its economic self-interest to attempt unilaterally to raise retail ebook prices,” the DOJ said in its lawsuit.
The publishers “feared that lower retail prices for ebooks might lead eventually to lower wholesale prices for ebooks, lower prices for print books or other consequences the publishers hoped to avoid,” the DOJ said in court documents.
The European Union launched its own investigation of ebook pricing in December.