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AG Horne Files Antitrust Suit Again U.S. Publishers And Apple For Fixing E-Book Prices

PHOENIX (Wednesday, April 11, 2012) Attorney General Tom Horne and 15 other state attorneys general today filed suit against three of the nation’s largest book publishers and Apple, Inc. for conspiring to raise the retail prices of electronic books. Electronic books, commonly referred to as “e-books”, are electronic versions of books that can be read on a variety of electronic devices including cellular telephones, computers, tablets and e-book readers.

“Agreements among competitors to fix prices are illegal,” Horne said. “As Attorney General, I will ensure that this office vigorously protects Arizona consumers from companies that violate antitrust laws and raise costs for customers.”

The lawsuit, filed in the Western District of Texas, alleges that Macmillan, Penguin and Simon & Schuster conspired with other publishers and Apple to artificially raise retail prices for e-books by imposing a distribution model in which the publishers set the prices for bestseller e-books at $12.99 and $14.99. When Apple prepared to enter the e-book market in late 2009 and early 2010, the publishers and Apple agreed to adopt an agency distribution model as a mechanism to allow them to fix prices. To enforce their price-fixing scheme, the publishers and Apple relied on contract terms that forced all e-book outlets to sell e-books at the same price. Because the publishers agreed to use the same prices, retail price competition was eliminated. According to the States’ enforcement action, the coordinated agreement to fix prices resulted in e-book customers paying more than $100 million in overcharges.

The States seek injunctive relief to reverse the effects of the defendants’ anti-competitive conduct as well as damages for customers who paid artificially inflated prices for e-books.

The States have reached agreements in principle with Harper Collins and Hachette to provide significant consumer restitution as well as injunctive relief.

Arizona joined Alaska, Colorado, Connecticut, Illinois, Iowa, Maryland, Missouri, Ohio, Pennsylvania, Puerto Rico, South Dakota, Tennessee, Texas, Vermont and West Virginia in today’s enforcement action.

Defendants named in the States’ antitrust action:

  • Macmillan
  • Simon & Schuster
  • Penguin Group
  • Apple Inc.

The case is being handled by Assistant Attorney General Nancy Bonnell in the Consumer Advocacy Division.

A copy of the lawsuit is attached.

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