Penguin settles price-fixing case

Posted by Emma Woollacott

Penguin has agreed to settle with the Department of Justice over its alleged e-book price-fixing, ramping up the pressure on Apple to do the same.

Hachette, HarperCollins and Simon & Schuster have already settled, leaving Apple and Macmillan as the only stand-outs; their trial's due to start next June.

The publishers were accused of having scrapped retail price competition, resulting in consumers paying millions of dollars more for their e-books than they should have.

"Since the department’s settlement with Hachette, HarperCollins and Simon & Schuster, consumers are already paying lower prices for the e-book versions of many of those publishers’ new releases and bestsellers," says Jamillia Ferris, chief of staff and counsel at the Department of Justice’s Antitrust Division.  

"If approved by the court, the proposed settlement with Penguin will be an important step toward undoing the harm caused by the publishers’ anticompetitive conduct and restoring retail price competition so consumers can pay lower prices for Penguin’s e-books."

According to the complaint, the companies signed contracts that eliminated price competition among bookstores selling e-books. Before this, many sold them at the magic $9.99 price point - afterwards, says the department, prices rose to $12.99, $14.99 or more.

Under the proposed settlement, Penguin will scrap its agreements with Apple and other e-book retailers, and will be banned for two years from doing anything similar with other retailers.  

It will also have to abide by a strong antitrust compliance program, including giving the department advance notification of any planned e-book joint ventures, and is forbidden from agreeing to any kind of most favored nation agreement that could undermine the settlement in the next five years.

All this will apply to Penguin's proposed joint venture with Random House, the US' largest book publisher - a deal which is now getting intense scrutiny from the department.