From Publishers Weekly:
Three publishers—Hachette, HarperCollins, and Simon & Schuster—have agreed to a proposed settlement with the U.S. Department of Justice to settle federal claims of price fixing regarding e-books. PW takes an initial look at the broad strokes of the deal, and what it means for the settling publishers.
The agency model is not dead. However, once the settlement goes into effect, the current agency agreements, along with the “Most Favored Nation” clauses they included, are history, at least for a period of time.
Going forward, the Settling Publishers can still use the agency model if they choose, but for a period of two years they cannot dictate final consumer prices, which was the allure of the agency model to begin with. Under the terms of the Settlement, however, e-book retailers can only lower consumer prices up to the amount of their commission—generally 30%, under current agency terms.
Publishers are also expressly enjoined from “retaliating” against e-book retailers.
This is the most onerous part of the settlement, and helps explain why Macmillan and Penguin have decided to fight. Under the Settlement, each publisher will have to engage in a number of compliance measures, including:
The appointment of an “Anti-Trust Compliance Officer,” reporting directly to the company’s general counsel.
In addition, the publishers must provide at least “four hours of training” for relevant staff delivered by an attorney and conduct “an annual compliance audit.”
The Settling Publishers must also furnish to the DoJ “on a quarterly basis” electronic copies of any non-privileged communications containing allegations of noncompliance and must “maintain and furnish to the Department of Justice on a quarterly basis, a log of all oral and written communications, excluding privileged or public communications,” between the publishers’ “officers, directors, or employees” involved in the development of the Settling Defendant’s plans or strategies relating to e-books.
Under the Settlement, the DoJ can also inspect the publishers’ offices, and “require Settling Defendants to provide to the United States hard copy or electronic copies of all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of Settling Defendants, relating to any matters contained in this Final Judgment.”
Link to the rest at Publishers Weekly and thanks to David for the tip.
Say what you want about the government, but they sure know how to write an audit clause.
You can see the kind of drag that extreme antitrust compliance can exert on an organization. Passive Guy assumes the internal controls at non-settling companies are similarly strict. As mentioned in a prior post, they won’t want to give the DOJ additional ammunition to use in the suit.