The Next Chapter: DOJ Sues Apple and Publishing Companies for Alleged e-Book Conspiracy

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How much should a consumer pay for an electronic book (“e-book”)? Amazon used to sell e-books for $9.99. After Apple, Inc. (“Apple”) entered the market with its e-book application for the iPad, and entered into different distribution arrangements with publishers, $14.99 became the new norm. However, with the arrival of the antitrust enforcers, lawsuits, and simultaneous consent decrees with some, but not all, defendants, $9.99 may again become standard.

In the culmination of antitrust/competition investigations by the U.S. Department of Justice Antitrust Division (“DOJ”), state attorneys general, and the European Commission, the DOJ on April 11, 2012 filed a lawsuit against Apple and five of the six largest U.S. book publishers (“Defendant Publishers”) alleging a per se violation of Section 1 of the Sherman Act for conspiring to raise the retail price of e-books. United States v. Apple, Inc., No. 1:12-cv-2826 (S.D.N.Y. filed April 11, 2012). Three of the Defendant Publishers (Hachette, HarperCollins, and Simon & Schuster) agreed to consent decrees with the DOJ, but Apple and the remaining two Defendant Publishers (Macmillan and Penguin) have not reached a settlement. Several states have also filed a lawsuit against Apple, Penguin, Macmillan, and Simon & Schuster. The State of Texas v. Penguin Group (USA) Inc., No. 1:12-cv-00324 (W.D. Tex. Filed April 11, 2012). These enforcement actions follow a number of consumer class actions filed against Apple and the Defendant Publishers across the U.S. in 2011.

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