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Thursday, February 22, 2024
Courthouse News Service
Thursday, February 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Feds Pull Penguin Into|E-Book Price-Fixing Deal

MANHATTAN (CN) - Penguin Group has agreed to end its price-fixing agreements with other e-book retailers, the Justice Department said, noting that it is still pursuing charges against Apple and Macmillan.

The government had sued six of the world's leading publishers and two subsidiaries on April 11. It claimed the publishers conspired to raise e-book prices after determining that Amazon, with its $9.99 e-books, was unlikely to budge on pricing.

"To effectuate their conspiracy, the publisher defendants teamed up with Apple, which shared the same goal of restraining retail price competition in the sale of e-books," the lawsuit states.

Instead of $9.99, the defendants allegedly priced the e-book editions of new and bestselling books at $12.99, $14.99 or $16.99. Retail e-book prices increased in relation to the hardcover price, according to the complaint.

The government said the conspiracy caused consumers to pay "tens of millions of dollars more for e-books than they otherwise would have paid."

Three publishers - Hachette, HarperCollins, and Simon & Schuster - settled immediately, and a federal judge approved their deal in September.

Penguin, a New York company, joined the settling parties on Tuesday.

The government says it is ready to go to trial in June 2013 against the two remaining publishers, Apple and Macmillan, which is incorporated as Holtzbrinck Publishers.

Penguin's settlement requires it to terminate its agreements with Apple and other e-books retailers, the Justice Department said.

For two years, the publisher also cannot enter into agreements that constrain retailers from offering discounts or other e-book sale promotions.

A strong antitrust compliance program will further require Penguin to provide the Justice Department with advance notification of any e-book ventures it plans to undertake jointly with other publishers. Penguin must additionally divulge any communications it has with other publishers.

For five years, Penguin cannot agree to any kind of most favored nation (MFN) agreement that could undermine the effectiveness of the settlement, according to the deal.

The Justice Department says it is currently reviewing the proposed joint venture announced by Penguin and Random House Inc., the largest U.S. book publisher, which was never a party to the antitrust case.

Once the government publishes the proposed settlement, along with a competitive impact statement, in the Federal Register, the public will have 60 days to comment.

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