From the Wall Street Journal:
The U.S. filed an antitrust lawsuit Wednesday against Apple Inc. and five of the nation’s largest publishers, alleging they conspired to limit competition for the pricing of e-books.
The lawsuit, filed in Manhattan federal court by the U.S. Department of Justice’s Antitrust Division, alleges Apple and the publishers reached an agreement where retail price competition would cease, retail e-books prices would increase significantly and Apple would be guarantee a 30% “commission” on each e-book sold.
Three of the publishers have agreed to settle, according to court documents. Those are Hachette Book Group, Simon & Schuster and HarperCollins Publishers Inc.
. . . .
“Defendants’ ongoing conspiracy and agreement have caused e-book consumers to pay tens of millions of dollars more for e-books than they otherwise would have paid,” the lawsuit said.
. . . .
The publishers named in the lawsuit are: CBS Corp.’s Simon & Schuster Inc., News Corp.’s HarperCollins, Lagardere SCA’s Hachette, Pearson PLC’s Penguin Group (USA) and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH.
. . . .
The suit says that “starting no later than September of 2008 and continuing for at least one year, the Publisher Defendants’ CEOs (at times joined by one non-defendant publisher’s CEO) met privately as a group approximately once per quarter. These meetings took place in private dining rooms of upscale Manhattan restaurants and were used to discuss confidential business andcompetitive matters, including Amazon’s e-book retailing practices. No legal counsel was present at any of these meetings.”
According to the suit, Apple executive Eddy Cue, telephoned each of the five publishers on or around Dec. 8, 2009, to schedule exploratory meetings in New York City on Dec. 15 and Dec. 16.
The suit said, “It appears that Hachette and HarperCollins communicated with each other about moving to an agency model during the brief window between Mr. Cue’s first telephone calls to the Publisher Defendants and his visit to meet with their CEOs.”
The suit also said, “the plan—what Apple proudly described as an “aikido move” —worked. Over three days in January 2010, each Publisher Defendant entered into a functionally identical agency contract with Apple that would go into effect simultaneously in April 2010 and “chang[e] the industry permanently.”
In contending that there was a conspiracy behind the pricing effort, the Justice Department said in its suit that the publishers “regularly communicated with each other in private conversations, both in person and on the telephone, and in e-mails to each other to exchange sensitive information and assurances of solidarity to advance the ends of the conspiracy.” It also alleged that publishers “discussed, agreed to, and encouraged each other to collective action to force Amazon to raise its retail e-book prices.”
It also said in the suit that the publishers “took steps to conceal their communications with one another, including instructions to ‘double delete’ e-mail and taking other measures to avoid leaving a paper trail.”
Link to the rest at The Wall Street Journal (Link may expire)
And here is a copy of the Complaint filed by the Department of Justice today.