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Barnes & Noble files official complaint over ebook settlements

Won't somebody please think of the American public?

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Barnes & Noble has lodged a complaint over the ebook settlement proposed by the Department of Justice, claiming that it will be bad news for booksellers and the American public.

The bookseller, which has been competing in the market with its Nook ereader, said that the DoJ's antitrust case against Apple and five publishing houses over pricing of ebooks was an attempt to regulate "a nascent technology industry that it little understands".

The DoJ claims that Apple and the publishers' move to agency pricing from wholesale pricing for ebooks was anticompetitive because they colluded on the cost to consumers. It also suggests that the fruity firm and the others decided on the changes to squeeze Amazon's hold on the market.

Amazon and its Kindle ereader were taking over the ebook market before Apple came up with the plan to let the publishers set the prices of books and take its traditional 30 per cent cut, the agency model. Before that, Amazon was buying books on the wholesale model, where it paid a set price for the books and then it got to decide what price they were for customers.

On the wholesale model, Amazon was selling ebooks at little to no profit to hoover up market share and promote its Kindle. Publishers were freaking out because ebooks were pushing into paper book sales and they didn't think they could keep their healthy profit margins if people got used to cheap books.

The DoJ has gotten settlements with three of the publishers, Simon & Schuster, HarperCollins and Hachete, but Apple, Penguin and Macmillan are still holding out.

B&N said today that the settlement would ultimately turn out to be bad for pricing.

"The Justice Department’s settlement proposal, which would permit Amazon to resume using its prior monopoly for anticompetitive purposes, appears to be based on a fundamental misunderstanding of the business industry and market for books by the DoJ," B&N's general counsel Gene DeFelice told The Register in an emailed statement.

"It also will permit Amazon to exploit its monopoly to hurt consumers, increase prices over time, and reduce choice. We believe it is clearly not in the best interest of American consumers."

The companies that have agreed to settle the case are being required to throw out their existing agency contracts and are forbidden from trying to stop bookshops discounting books for two years. They're also not allowed to add most-favoured nation clauses to contracts, which promise the reseller that the books they're selling them won't be given to anyone else at a cheaper price.

B&N said in its court filing that this "regulatory regime" would hurt innocent third parties and book-buyers.

"The proposed settlement seeks to end agency arrangements that are commonplace in many industries and that have brought more competition to the sale of ebooks," the filing said.

B&N also alleges that the government has failed to present a factual basis for the settlements and that the agreements have to be rejected by the court because the Tunney Act requires courts to throw out any judgments that aren't in the "public interest".

The bookseller said that before the agency model, potential rivals to Amazon, including itself, couldn't compete with how the internet giant was pricing its books below cost. The result was that Amazon held over 90 per cent of the market, in comparison to 60 per cent today. ®

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