Ebook price-fix trial showdown? Bring it on, say Apple and pals
Europe reckons fruity firm may settle
Apple wants to go to trial in the US over allegations of price-fixing in the ebook market, the company's lawyer said yesterday, but it may end up settling with the EU.
The fruity firm and fellow defendants Penguin and Macmillan were in court yesterday for the first hearing in the US government-led case against them. According to the allegations, they "conspired" to set ebook prices to compete against Amazon. All three have stated their intention to fight the allegations.
"Our basic view is that we would like the case to be decided on the merits," Apple lawyer Daniel Floyd told US District Judge Denise Cote, according to Reuters. "We believe that this is not an appropriate case against us and we would like to validate that."
Publisher Penguin Group is also keen to put its fate in the hands of the court.
In an emailed statement to The Register, John Makinson, chairman and CEO of Penguin, said that the company had not taken this step lightly.
"A responsible company does not choose a path of litigation with US Government agencies without carefully weighing the implications of that course of action," he said. "Nonetheless, countless hours discussing this issue with colleagues here at Penguin, as well as with our parent company, Pearson plc, have not led any of us to the view that we should settle this matter."
Makinson said that Penguin was the only firm who hadn't had any settlement discussions with the DOJ.
"The agency model is the one that offers consumers the prospect of an open and competitive market for e-books," he said.
And publisher Macmillan has also said it's prepared to defend itself against claims of collusion.
"Other publishers have chosen to settle. That is their decision to make. We have decided to fight this in court," CEO John Sargent said in a letter on the firm's website.
However, three other publishers that were also sued have settled. HarperCollins, Simon & Schuster and Hachette all chose to end the case before it even began, giving in to the Department of Justice's demand that they rip up their agreements with Apple on top of other conditions.
Meanwhile, the European Commission's antitrust division has also been investigating ebook pricing and its chief Joaquin Almunia said yesterday that it had received proposals from the fruity firm and four others.
"Last week, the European Commission received proposals of commitments from Apple and four publishers while – in parallel – three of these publishers had reached a settlement with the DoJ," he said during a speech at the 11th Annual Conference of the International Competition Network in Rio de Janeiro.
Quite why Apple wants to settle in Europe but fight on in the US is something of a mystery, although it may have to do with the commission's power to fine the firm up to 10 per cent of its worldwide turnover.
The judge in the DoJ's case is now in charge of the states' attorneys general case against all six defendants, which is seeking redress for ebook customers as well.
Fifteen US states along with the Commonwealth of Puerto Rico are suing Apple and the publishers for damages for the alleged price collusion.
However, there is also a separate class action suit going on that was brought by consumers on their own behalf.
The three publishers that settled with the DoJ are also in talks to settle this case, which may have an impact on the consumer class action.
"There could be something left of the class, or nothing left of the class," HarperCollins lawyer, Shepard Goldfein, told the judge.
HarperCollins and Hachette have already settled with two states, Texas and Connecticut, agreeing to fork over $52m and Simon & Schuster is in negotiations to join that settlement.
Judge Cote has set the next hearing in the US for 22 June.
Apple had not returned a request for comment at the time of publication. ®
Re: What I don't get...
And even better, then settle in Europe for the same thing...
To EU: "Yeah, my bad. You got us, here's pocket-change so you don't nail us for 10% of global turnover..."
To US: "No, nothing to see here. Move on, move on..."
What I don't get...
is this whole "settling without addmission of guilt or negligence."
Isn't that like saying "I know there's a bar of chocolate missing, I'll pay the "fine" for a bar of chocolate, but I'm not saying I nicked it."
And surely if 3 sides settle, Apple can't really turn around and say "Nooo... THEY might think it was, but it wasn't really, gov."
"The agency model is the one that offers consumers the prospect of an open and competitive market for e-books"
How is a market competitive if they're all selling the same thing for the same price?
Re: The agency model..
"Well the agency model is a bit more open in that we know from basic Maths how much the publisher gets and how much the store gets"
That's true - the publisher sets the retail price and the retailer cannot set a different price. With the wholesale model we know the publisher's intended retail price with the RRP, but not the wholesale price.
I am, however, completely mystified how this makes it competitive - especially given the most favoured nation clause in the contracts which effectively ensures that a competitor cannot under-cut the iBookstore price without the publisher making up the difference (Apple's - or anyone else with a similar contract - cut will be the same regardless).
Re: Competitive? @Anne-Lise Pasch
I think you missed the point. The OP didn't mean that all books would be sold at the same price, but that an individual book could not be sold for a lower price than that set by the publisher. If retailer A cannot sell book B at a price lower than that set, then the retailer is not in competition with anyone else - he is merely an agent for the publisher. That leads to a reduction in consumer choice, and is probably illegal under EU law.
Personally, I find this model extremely offensive. Since there are no second-hand copies of e-books to be (legally) had, then the publishers are screwing everyone over. The joy with books has always been that, if you have sufficient patience, the book you want will always be available for half-price or less on the second-hand market within weeks or months. That is the way I have bought most of my books over the years (does that make me a freetard?), except for works by some authors I particularly like. One of the reasons I regard ebooks with suspicion is that they cost too much new, and I can't legally get them second-hand.