Apple accused of e-book price fixing

Posted by Emma Woollacott

Apple, along with a number of book publishers, has been accused of illegally fixing prices, forcing Amazon to scrap discount programs.

According to the lawsuit, filed by Anthony Petru of Oakland, California and Marcus Mathis of Natchez, Missouri, Apple 'colluded to increase prices' with HarperCollins, Hachette, Macmillan, Penguin and Simon & Schuster.

"Fortunately for the publishers, they had a co-conspirator as terrified as they were over Amazon's popularity and pricing structure, and that was Apple," the plaintiffs lawyer, Hagen Berman, said in a statement.

"We intend to prove that Apple needed a way to neutralize Amazon's Kindle before its popularity could challenge the upcoming introduction of the iPad, a device Apple intended to compete as an e-reader."

Last year, Amazon said it was forced to increase its prices above $9.99, after pressure from book publishers to do so. It had previosuly been discounting prices to that level in an effort to gain market traction for its Kindle e-reader.

Unusually, the publishers concerned adopted what's called an agency model for sales, with Apple acting as their agent, allowing them to set prices and taking a cut of the profits.

Normally, booksellers agree a buying price for each book and can then sell at their own price, allowing Amazon to keep prices below $10.

"What is most loathsome about the behavior of Apple and the publishers is that it is stifling the power of innovation, the very thing Apple purports to champion," says Hagen Berman.

"A few big business heavyweights are taking a powerful advancement of technology that would benefit consumers and suffocating it to protect profit margins and market-share."

The plaintiffs have applied for class action status.