Justice Dept. Settles with Three Publishers, Continues Action Against Apple and Two Others
The department’s Antitrust Division and the European Commission cooperated closely with each other throughout the course of their respective investigations, with frequent contact between the investigative staffs and the senior officials of the two agencies. The department also worked closely with the states of Connecticut and Texas to uncover the publishers’ illegal conspiracy.
According to the complaint, the five publishers and Apple were unhappy that competition among eBook sellers had reduced eBook prices and the retail profit margins of the book sellers to levels they thought were too low. To address these concerns, they worked together to enter into contracts that eliminated price competition among bookstores selling eBooks, substantially increasing prices paid by consumers.
Before the companies began their conspiracy, retailers regularly sold eBook versions of new releases and bestsellers for, as described by one of the publisher’s CEO, the “wretched $9.99 price point.” As a result of the conspiracy, consumers are now typically forced to pay $12.99, $14.99, or more for the most sought-after eBooks, the department said.
The department alleges the conspiracy began in the summer of 2009. CEOs from the publishing companies met privately as a group about once per quarter. The meetings took place in private dining rooms of upscale Manhattan restaurants and were used to discuss confidential business and competitive matters, including Amazon’s eBook’s retailing practices.
The complaint states that the companies accomplished their conspiracy by agreeing to stop the longstanding practice of selling eBooks, as they long sold print books, on wholesale to bookstores, and leaving it to the bookstores to set the price at which they would sell the eBooks to consumers. Through their conspiracy, the companies imposed a new model under which the publishers seized eBook pricing authority from all of their retail bookstores and raised prices for eBooks.
As stated in the department’s complaint, one publisher’s CEO said, “Our goal is to force Amazon to return to acceptable sales prices through the establishment of agency contracts in the USA. . . . To succeed our colleagues must know that we entered the fray and follow us.”