Apple, publishers threatened with Justice lawsuits, report says

March 8, 2012

The U.S. Justice Department has reportedly warned Apple and five of the biggest U.S. publishers that it has plans to sue them for allegedly colluding over the price of e-books. According to a report from the Wall Street Journal, the potential suit sounds similar to an ongoing investigation in the European Union.

Citing unnamed “people familiar with the matter,” the report said that Apple, along with Simon and Schuster, Hachette Book Group, Penguin Group, Macmillan and HarperCollins face the potential suit. Representatives from “several” of the companies have reportedly tried to settle the case before it reaches the courtroom.

Apple spokeswoman Kristin Huguet declined to comment on the report.

In December, the European Union announced that it had opened formal antitrust proceedings to investigate whether the same publishers had “engaged in anti-competitive practices affecting the sale of e-books” in Europe. That announcement followed a series of unannounced raids at e-book companies conducted by European antitrust officials last March.

Apple’s current deal with publishers mirrors its developer program; the company gets 30 percent of the price of any e-book. The report said that the Justice Department believes that Apple and publishers have used this model to raise prices across the e-book industry. Sources told the newspaper that the companies are working on a settlement but “by no means are we close.”

According to a January report from the Pew Internet and American Life project, e-book reader ownership doubled between mid-December 2011 and early January 2012, jumping from 18 percent to 29 percent. Media Bistro reported in late February that 2011 e-book sales in the United States were up in 117 percent over 2010, generating $970 million in sales.

Related stories:

Apple, publishers named in EU e-book antitrust probe

Apple’s new iPad: The rumor scorecard

Apple ready to tackle television with its new iPad

Apple expected to delve into textbooks

Hayley Tsukayama covers consumer technology for The Washington Post.
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