The U.S. Justice Department has warned Apple and five of the biggest U.S. publishers that it plans to sue them for conspiring to raise the price of electronic books, reports “The Wall Street Journal” (http://macte.ch/IAe6j), quoting unnamed “people familiar with the matter.”
The five publishers facing a potential suit are :CBS Corp.’s Simon & Schuster Inc.; Lagardere SCA’s Hachette Book Group; Pearson PLC’s Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers Inc., a unit of News Corp. Several of the parties have purportedly held talks to settle the antitrust case and head off a court battle.
According to the “WSJ,” the case centers on Apple’s move to change the way that publishers charged for e-books as it prepared to introduce its first iPad in 2010. Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that “wholesale model,” booksellers were then free to offer those books to customers for less than the cover price if they wished.
Apple suggested moving to an “agency model,” under which the publishers would set the price of the book and Apple would take a 30% cut. However, Apple also insisted that publishers couldn’t let rival retailers sell the same book at a lower price.
The Justice Department feels Apple and the publishers acted in concert to raise prices across the industry. It’s prepared to sue them for violating federal antitrust laws, says the “WSJ.”