Simon and Schuster settles in ebook case

Simon Schuster, one of the five major book publishers accused in multiple lawsuits of conspiring with Apple to fix ebook prices, has settled the complaint filed by numerous states’ attorneys-general in the US.

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(Stack of books image by Horia Varlan, CC2.0)

Denise Cote, the federal judge overseeing the three different antitrust complaints pending against Apple and the defendant publishers, granted a motion on Tuesday to dismiss Simon Schuster (owned by ZDNet Australia‘s parent company, CBS) from the complaint. This suit was originally filed by the attorneys-general from Texas, as well as 15 other attorneys-general. More states have joined that suit as plaintiffs; 29 are now involved.

The terms of the settlement weren’t provided in the court documents, and Simon Schuster declined to comment. Apple and the Texas attorney-generals’ office did not immediately respond to a request for comment.

Last month, Simon Schuster also settled a complaint by the US Department of Justice (DoJ), as did Lagardere SCA’s Hachette Book Group and News Corp’s HarperCollins. The defendants that refused to settle and deny wrongdoing are Apple, Macmillan Publishers (owned by Germany’s Verlagsgruppe Georg von Holtzbrinck holding company) and Pearson PLC’s Penguin Group.

The move by Simon Schuster follows similar settlement deals that the attorneys-general reached with HarperCollins and Hachette.

In addition to the complaints filed by the many states’ attorneys-general and the DoJ, a group of consumers is seeking to bring a class-action suit.

The plaintiffs in each of the three complaints allege that Apple and the five publishing houses worked together to wrongfully manipulate the prices of ebooks, while limiting Amazon’s control over the ebook market. Amazon possessed an estimated 90 per cent share of the ebook market prior to 2010; that’s since fallen to 60 per cent. The plaintiffs allege that the defendant publishers all moved in lockstep to jack up retail prices.

In the past, publishers sold books to merchants, such as Barnes Noble, at a wholesale price; the retailers then got to set the price that consumers paid. But after numerous talks with Apple and each other, the defendant publishers all agreed to move to an agency model, the government claims. This strategy calls for a retailer to act as an agent of the publishers, which then becomes the one that sets the retail prices.

The states and the DoJ say that Apple helped to convince the publisher defendants to work together to move to an agency model in time for the launch of the iPad on 27 January 2010. From that day on, the publishers all began pressuring Amazon and other retailers to adopt the agency model, the plaintiffs say.

Soon after, ebooks that once went for US$9.99 were listed between US$12.99 and US$14.99.

Apple and the publishers tried to get the complaint filed by the consumer group tossed out on Tuesday, but Cote denied the request.

In her written ruling, Cote said: “It is presumed that the conduct by all parties would be unlawful under the rule of reason.”

Via CNET

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