Apple found guilty of fixing E-Book prices

ibooks_ibookstore

Reuters reports that a U.S. federal judge has found Apple guilty of fixing e-book prices in violation of the antitrust law.

The Department of Justice had filed an antitrust lawsuit against Apple and five publishers over allegations of fixing e-book charges in April 2012.

Reuters reports:

A federal judge on Wednesday ruled that Apple Inc conspired to raise the retail prices of e-books, and said a trial for damages will follow.

The decision by U.S. District Judge Denise Cote in Manhattan is a victory for the U.S. government and various states, which the judge said are entitled to injunctive relief.

The lawsuit accused Apple of colluding with five publishers to undercut Amazon’s dominance in the ebook market.

Under the agency model, Apple takes a 30 percent cut of whatever price the publisher sets. Additionally, it disallows publishers to sell an e-book on other stores at a price cheaper than that on the iBookstore. In contrast, Amazon, under the “wholesale” pricing model, had the freedom to set e-book prices and sold a number of newly released and best selling e-books at $9.99.

According to the DOJ, the agency pricing model led to an overall increase in the price of e-books which isn’t great news for the consumer. Through the backing of a strong player like Apple, publishers gained bargaining power against Amazon, which they say, helped reduce its dominance and increase competition in the e-book market.

The publishers – Hachette Book Group Inc and Macmillan, HarperCollins Publishers, Penguin Group and Simon & Schuster had reached an out of court settlement with the U.S. government and the states.

There will now be a separate trial to determine damages to be imposed on Apple for the violation of the antitrust lawsuit. In case you’re interested, read the full 160-page decision by Judge Denise Cote here.

Via Reuters