Battle of the e-books: Apple, Macmillan, Penguin deny price conspiracy v Amazon
Three giant companies - Apple, Macmillan and Penguin - accused by the U.S.Justice Department of conspiring to fix prices of digital books to undermine market leader Amazon, are fighting on.
Apple fights on in book battle
Three other publishers, Simon & Schuster, Hachette and News Corp's HarperCollins, also named in the US government’s antitrust lawsuit in New York , have settled their cases.
The Justice department said in its complaint today, “Apple clearly understood that its participation in this scheme would result in higher prices to consumers".
The lawsuit alleges that Apple and the publishers conspired to limit e-book price competition.
Attorney General Eric Holder unveiling the federal suit told a news conference. "As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles," he said.
Some publishers hit back at the allegations, saying they did nothing wrong and were acting to prevent Amazon from taking a dominant position in e-book retailing.
Lawyer Allen Grunes, commented to Bloomberg Business News, “If the allegations are true, this was an orchestrated effort to get Amazon to stop discounting electronic versions of books. To the extent that Apple was involved in the plot, it reflects badly on the company."
Apple, Macmillan, a unit of German company Verlagsgruppe Georg von Holtzbrinck , and Pearson Plc, owners of Penguin, refused to engage in settlement talks.
The three deny colluding to raise prices for digital books.Their argument is that pricing agreements between Apple and publishers enhance e-book competition .
Simon and Schuster, HarperCollins and Hachette are to cancel contracts with Amazon, Google and other electronic booksellers that allowed the publishers to set prices.
When Apple launched the iPad in 2010, publishers could set their own prices for e-books as long as Apple got a 30 percent cut. This so-called agency model lets publishers -- not vendors -- set e-book prices.
Amazon on the other hand bought the books at a big discount and sold them at $9.99. Following the Apple deal, Amazon also allowed publishers to set their own prices, resulting in higher prices on the Kindle as well. Some books went up to $14.99.
"This action drove up e-book prices virtually overnight," said Sharis Pozen, head of the DOJ's antitrust division.
E-books are booming. Sales rose 117 percent in 2011, bringing in almost a $1 billion .