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Publishers stand behind Apple in ebook price-fixing fight

DoJ trying to 'impose a specific business model on the publishing industry,' they argue

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The five publishers involved in the Apple ebook lawsuit-o-rama have filed a formal objection to the remedies proposed by the US Department of Justice after Cupertino lost its court battle concerning alleged price fixing.

"Despite achieving their stated goal of returning price competition, plaintiffs now seek to improperly impose additional, unwarranted restrictions on the settling defendants, thereby depriving each publisher of the benefit of its bargain with plaintiffs," the publishers write in their filing.

Hachette, HarperCollins, Holtzbrinck/Macmillan, Penguin, and Simon & Schuster claim that the sweeping restrictions proposed by the DoJ would unfairly punish them – an especially galling outcome, seeing as how all five reached settlements with the DoJ and various state attorneys general, and paid out $166m in total to settle the claims.

Only Apple risked a trial on the matter – and lost.

Among the remedies proposed by the DoJ is the requirement that Apple "terminate its existing agreements with the five major publishers with which it conspired," be barred for five years from entering any new ebook distribution deals that would restrict Apple from price competition, and that Cook & Co. "be prohibited from again serving as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms" – agency terms being deals in which the publishers set the ebooks' prices and Apple takes a cut.

The publishers argue that the DoJ's proposed remedies punish them by preventing them from entering into agency agreements with Apple, even though their own settlements allow them to strike agency deals with ebook sellers, albeit with some limitations.

"The provisions do not impose any limitation on Apple's pricing behavior at all;" the publishers argue in their filing, "rather, under the guise of punishing Apple, they effectively punish the Settling Defendants by prohibiting agreements with Apple using an agency model."

The DoJ disagrees with the publishers – the Settling Defendants – that the proposed remedies conflict with their settlements. "The proposed relief does not modify the terms of the settlements we reached with the publisher defendants," a DoJ spokeswoman told Reuters.

The publishers, however, are of the opinion that the DoJ is overreaching by "attempting to impose a specific business model on the publishing industry, despite their express and repeated representations that they would play no such role."

This Friday, Apple will be back in court to argue against the DoJ's proposed remedies. With their Wednesday court filing, Hachette, HarperCollins, Holtzbrinck/Macmillan, Penguin, and Simon & Schuster have come down solidly on Apple's side – at least regarding the five-year ban on agency-agreement deals.

There's more to the DoJ's remedies, however. The proposal also would require Apple to allow ebook retailers such as Amazon and Barnes & Noble to sell ebooks directly through their iOS apps – a practice Apple now bans – and would put Apple under the watchful eye of an "external monitor" whose job would be, as the DoJ puts it, "to ensure that Apple's internal antitrust compliance policies are sufficient to catch anticompetitive activities before they result in harm to consumers."

When arguing for relief from those proposed remedies, Apple will be on its own. ®

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