The US Justice Department filed an antitrust lawsuit naming Apple and five publishing houses alleging a "conspiracy to limit" e-book price competition, court documents showed. The suit filed in US District Court in New York said the conspiracy involved "schemes to limit Amazon's ability to discount e-books," hurting consumers by pushing up prices for electronic books.
The lawsuit comes amid probes on both sides of the Atlantic over the efforts to limit discounting on electronic books, which had been dominated by Amazon until Apple launched its iPad in 2010. The US lawsuit said the publishers "shared a common objective with Apple to limit e-book retail price competition."
Named in the suit along with Apple were CBS Corp's Simon & Schuster; Hachette Book Group, part of France's Lagardere; Pearson's Penguin Group; Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck; and HarperCollins, a unit of News Corp, which owns The Wall Street Journal. The lawsuit said the publishers conspired with Apple to end the longstanding "wholesale model" in which e-books were sold to retailers, which had the power to establish their own prices.
They replaced this with a so-called "agency model" where publishers would have the power to set the prices retailers charge for the e-books. Under this arrangement, Apple was guaranteed a 30 percent commission on each e-book sold. The lawsuit said Apple's self-described "aikido move" worked, and that the publishers entered into contracts with the California tech giant under those terms. Prior to the introduction of Apple's iPad in April 2010, online retail giant Amazon, maker of the Kindle e-book reader, sold electronic versions of many new best sellers for $9.99. After the agency model was adopted, the prices rose to between $12.99 and $16.99, the suit said, and price competition among retailers was "unlawfully eliminated."