HARRISBURG – Pennsylvania has joined the Attorneys General from 14 states and Puerto Rico in a lawsuit charging three of the nation’s largest book publishers and Apple Inc. with colluding to fix the sales prices of electronic books.
Attorney General Linda Kelly said that the antitrust action is the result of a two-year investigation into allegations that publishers Penguin, Simon & Schuster and Macmillan conspired with other publishers and Apple to artificially raise e-book prices.
Kelly said that for years, retailers sold e-books through a traditional wholesale distribution model, under which retailers -not publishers – set e-books’ sales prices. The states allege that the defendants colluded to use a different distribution model to eliminate free market competition and allow publishers, not the marketplace set the price of e-books.
According to the lawsuit, the cost of New York Times Bestselling e-books rose from $9.99 to as much as $14.99 per book once Apple and the publishers agreed that e-books would be priced on an agency basis. Prices of other e-books, not on the best seller list also increased significantly.
Kelly said to enforce their price-fixing scheme; the publishers and Apple relied on contract terms that forced all e-book outlets to sell their products at the same price. This eliminated all retail price competition and resulted in e-book customers paying more than $100 million in overcharges.
The States’ antitrust action seeks 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.
Kelly noted that the states have reached an agreement in principle with Harper Collins and Hachette to provide significant consumer restitution and injunctive relief.
The enforcement action includes Texas, Connecticut, Alaska, Arizona, Colorado, Illinois, Iowa, Maryland, Missouri, Ohio, Pennsylvania, Puerto Rico, South Dakota, Tennessee, Vermont and West Virginia.
The Commonwealth’s case was handled by Chief Deputy Attorney General James Donahue, III and Deputy Attorney General Jennifer Kirk of the Attorney General’s Antitrust Section.