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Penguin pays $75m to settle ebook price-fixing case

Apple left to swing it out with DoJ

The smart choice: opportunity from uncertainty

Penguin has agreed to hand over $75m along with costs to sort out US antitrust allegations over ebook price fixing.

The publisher had already agreed to settle with the Department of Justice and has put the price tag on the deal to pave the way for its merger with Random House.

Penguin is the last publisher to settle the case. Macmillan, HarperCollins, Simon & Schuster and Hachette have all signed on the dotted line with the DoJ, although financial terms haven't been agreed in all deals yet, leaving Apple the sole holdout.

Although Penguin has never admitted to any wrongdoing, it decided to settle with all the rest so it could get approval for its merger with Random House.

As well as the cash it has to stump out, Penguin, and by extension Random House, will have to abide by the other conditions of the settlement, including axing agency contracts with Apple and other retailers and abandoning the model for two years. It must also agree not to sign any "most favoured nation" trading deals for five years.

The agency model - which allowed publishers to set prices and hand the retailers a cut, instead of retailers setting the price after buying ebooks at a wholesale price - has been cited in allegations that publishers allegedly collaborated on ebook pricing. "Most favoured nation" clauses in contracts, meanwhile, stopped publishers from offering better deals to different retailers.

The DoJ has suggested that Apple was responsible for bringing the agency model to the ebook market and accused the fruity firm of joining in with the alleged price-fixing to oust Amazon as the market leader.

Apple has strenuously denied price-fixing, claiming it acted independently and had used the agency model because it made the best business sense. ®

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