DoJ could start Apple ebook price-fixing lawsuit this week
US Justice Dept gears up to throw sueball
Updated The US Department of Justice is getting ready to launch a lawsuit against Apple over alleged ebook price-fixing, according to whispering sources.
Those familiar with the matter told Reuters that the DOJ could sue Apple as early as today, since it wouldn't or couldn't sort out a settlement with the department so far, but no final decision has been made yet.
Both the DOJ and the European Commission's antitrust division have been investigating Apple and publishing houses Harper Collins, Penguin, Macmillan, Simon & Schuster and Hachette Livre over suspicions of price-fixing of ebooks.
Apple and the publishers signed contracts that took the ebook pricing model from wholesale to agency. With wholesale pricing, book resellers pay publishers a percentage of a recommended retail price and are then free to sell the book at whatever price they like. In agency pricing, the publishers set the price and the reseller takes a percentage of that price.
The regulators got involved when ebook prices went up and then stayed the same across platforms, indicating the possibility that the publishers, with the help of Apple, had agreed between themselves at what price ebooks should be set.
Apple has not publically commented on the regulators' investigations, but a court filing from the fruity firm in a class action suit in the US on the same issue claimed there was no reason for Apple to want to fix book prices.
Critics have suggested that Apple was in on the shenanigans because it wanted to unseat Amazon from the ebook throne, a claim the company has also rejected.
Under the wholesale model, Amazon was selling ebooks at knockdown prices, sometimes not even at a profit, in order to entice customers to buy its Kindle ereaders. After Apple signed for the agency model with publishers, they forced Amazon to take the same deal.
The DoJ and the EC have both been interested in settling the cases with Apple and the publishers, but the fruity firm and two book-houses have reportedly been less than keen to meet their terms.
If Apple and the publishers are found guilty of antitrust violations, they face fines of up to 10 per cent of worldwide turnover from the EC as well as a gift-wrapped admission of culpability in the class action suit, which could seek triple damages for ebook buyers.
Apple had not responded to a request for comment at the time of publication. ®
Updated to Add
Reports have it that the lawsuit has now been filed in Manhattan federal court. We'll let you know more once we have details of the filing.
Wholesale vs Price Fixing
As some of you clearly have no idea wtf you are talking about ...... :-)
Amazon basically say (or did prior to agency model) to publishers (figures are examples) :
"We will commit to buying 100 million of your books in the next year. For that commitment we want 20% discount on A-list titles, 40% discount on B-list etc etc"
Apple say :
"Sell via us and you must commit to selling no cheaper through any outlet. In addition we will take 30% of the retail price"
Now if you can't see the difference between that I despair of you all and you deserve to be ripped off.....
Nobody is claiming Amazon are "good guys", however Apple have lost the plot.
It is 10% of worldwide turnover.
Apple are fucked and it serves them right. Agency pricing model was just one step too far in terms of arrogance.
" I doubt there was collusion..."
And I suppose we still believe in the Tooth Fairy as well?