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Apple: ebook price fixing? Nooo, nothing to do with us, no siree

Maybe you should ask the publishers

Internet Security Threat Report 2014

Apple has told a US court it certainly wasn't involved in any conspiracy to rig the prices of ebooks.

The fruity firm said that it was neither involved in nor knew of any meetings or conversations between the publishing houses that "allegedly formed the basis of the purported conspiracy".

"Apple did not conspire to fix e-book prices. The evidence proves that Apple acted independently, to further its own legitimate business goals, in negotiating agency agreements with the publishers to enter the e-book market," the company said in a court filing.

The US Department of Justice brought a case against Apple and five publishers - HarperCollins, Simon & Schuster, Hachette, Macmillan and Penguin - claiming that the six firms had fixed the price of ebooks when they signed agency agreements.

Prior to the agency model, books were sold at a wholesale price and it was up to the retailer how much to charge customers, allowing Amazon to sell at a loss in order to promote its Kindle ereaders. Under the agency contracts, publishers set the end price and retailers took a percentage.

Apple also had most favoured nation clauses in its contracts, which stopped publishers from being able to offer lower prices to other retailers.

But Cupertino insisted that agency was the "logical model for a new entrant to the ebooks business in 2009".

"The market was roiled by a public conflict between the publishers and Amazon. Amazon at the time sold 9 out of every 10 e-books, and many publishers publicly disagreed with Amazon’s uniform, below-cost pricing strategy for New York Times bestsellers," Apple said.

"This tumult in the industry inspired the second largest e-retailer, Barnes & Noble, to push for agency agreements with the publishers. And Amazon used an agency-like model for small publishers and self-published authors.

"In other words, Apple did not introduce agency to the e-book industry; it was simply the first to reach an agency agreement with the industry’s largest publishers," the firm added.

Apple also contends that most favoured nation clauses were just there to "advance its independent and procompetitive business objective: to enter the market and offer competitive prices".

But the DoJ reckons that Apple and the publishers agreed on higher prices for ebooks to break Amazon's dominance and make more money. Although they've made the argument that stopping Amazon's climb to a potential monopoly is good for competition, the department hasn't agreed that two wrongs can make a right.

The DoJ has said in its filings that former CEO Steve Jobs admitted the price-fixing when he told his biographer that Apple "told the publishers; 'We'll go to the agency model, where you set the price and we get our 30 per cent and yes, the customer pays a little more, but that's what you want anyway'." ®

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