From Paid Content:
Macmillan CEO John Sargent sent a letter to authors and agents on Wednesday afternoon, saying that the publisher does not plan to follow Penguin’s lead and settle with the Department of Justice in the ebooks lawsuit. But, Sargent said, Macmillan voluntarily entered new retailer contracts that conform with many of the requirements in the DOJ’s settlement.
Macmillan is the smallest of the big-six publishers, and the only one that is wholly privately owned. Sargent says there are two reasons Macmillan is not settling: “First, it is hard to settle when you have done nothing wrong. Much as the lawyers explain to me that settling is completely standard business procedure, it still seems fundamentally flawed to me somehow.” More importantly, he writes:
Since the very beginning, the government’s demands have never wavered in all our discussions. They still insist on the two year discounting regime that forms the heart of the agreement signed by the three settling publishers. It was our belief that Amazon would use that entire discount for the two years. That would mean that retailers who felt they needed to match prices with Amazon would have no revenue from ebooks from five of the big publishers (and possibly the sixth) for two years. Not no profit, no revenue. For two years. We felt that few retailers could survive this or would choose to survive this.
Nevertheless, Macmillan has entered new contracts with most ebook retailers “except one whose term was not up yet” (he does not specify which one). Sargent explains the new terms: “All the new contracts are compliant with the government’s requests in their complaint. They contain no most-favored nations clauses and no price limits.”
. . . .
Despite these measures, the lawsuit continues. “The legal bills look like the unit sales numbers for 50 Shades of Grey,” Sargent writes.
Link to the rest at Paid Content
Apparently Mr. Sargent wasn’t listening to his lawyers when they explained basic antitrust law. As the trial judge has commented in her rulings, the DOJ complaint isn’t out on the fringes of price-fixing litigation.
The Price-Fix Six stepped in exactly the same cow pie that generations of business managers and owners have when they get together and plan to control prices in order to maintain profit margins and enjoy a quiet life free from nasty price competition. The lack of sophistication and subtlety in their conspiracy was breathtaking.
The only unique aspect of the whole affair was that the illegal meetings were held in an expensive French restaurant. PG doesn’t remember another price-fixing plot that has included this particular feature.
In Passive Guy’s consistently humble opinion, the terms required by to DOJ for settlement are pretty tame for the nature and magnitude of the price-fixing conspiracy. If Macmillan goes to trial, he wouldn’t be surprised if the court didn’t impose more severe penalties.