It’s Official: Department Of Justice Files Antitrust Suit Against Apple

Update:

It’s official, the Department of Justice has filed an Antitrust Lawsuit against Apple and other publishers over e-book price fixing.

From Bloomberg,

[quote]Apple and Macmillan, which have refused to engage in settlement talks with the Justice Department, deny they colluded to raise prices for digital books, according to people familiar with the matter … The government is seeking a settlement that would let Amazon and other retailers return to a wholesale model, where retailers decide what to charge customers, the people said. A settlement could also void so-called most-favored nation clauses in Apple’s contracts that require book sellers to provide the maker of the iPad with the lowest prices they offer competitors, the people said.[/quote]

Like we said earlier, this one is bound to get interesting.  Apple’s going to argue that they’ve offered publishers an additional model, thereby increasing alternatives in the market. Amazon’s going to argue that Apple’s strong-arming publishers into giving Apple preferential treatment, making it difficult for them to continue to sell e-books to customers at cheap prices.

Earlier:

The Department of Justice may be gearing up to filing an antitrust suit against Apple and a couple of other e-book publishing companies for price fixing. According to reports the department could file the suit as early as today.

From Reuters:

[quote]The Justice Department is investigating alleged price-fixing by Apple and five major publishers: CBS Corp’s Simon & Schuster Inc, HarperCollins Publishers Inc, Lagardere SCA’s Hachette Book Group, Pearson and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH. A lawsuit against Apple, one of the parties not in negotiations with the Justice Department for a potential settlement, could come as early as Wednesday but no final decision has been made, the people said.[/quote]

What the DoJ is trying to determine is whether or not Apple colluded with publishers to change the pricing model from the wholesale Amazon model to an angency model where publishers set prices for books on the iBookstore. The e-book model is similar to Apple’s App Store, and iTunes model. This whole suit seems to be based off words spoken by Steve Jobs in his bio about how the publishers disliked Amazon’s model of selling books below price, and how the Apple model put the power back in publishers hands. Amazon purchases ebooks in such bulk that it then offers the books up to consumers at a highly discounted rate.

Reuters is hinting that settlement may be an option, and reports over the last couple of weeks have certainly put Apple in negotiations with the DoJ, but recently the talks seem to have broken down with Apple refusing to accept the terms of the settlement in the US and EU.

It certainly seems like this antitrust case may be heading to a court sooner than later.

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