Apple reaches settlement with States, Consumers over E-Books price fixing case


Bloomberg reports that Apple has reached an out of court settlement with U.S. states and consumers seeking damages over the company’s fixing of e-Book prices.

The trial was set for July in which the company faced as much as $840 million in claims.

Apple Inc. (AAPL) reached a settlement with U.S. states and consumers seeking damages over the company’s fixing of electronic book prices, avoiding a trial in which it faced as much as $840 million in claims.

The trial set for July involved cases related to a ruling last year that company had orchestrated an illegal scheme with publishers to raise e-book prices.

The Department of Justice had filed an antitrust lawsuit against Apple and five publishers over allegations of fixing e-book charges in April 2012. The lawsuit accused Apple of colluding with five publishers to undercut Amazon’s dominance in the e-Book 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.

Last year, a U.S. federal judge has found Apple guilty of fixing e-book prices in violation of the antitrust law. A Federal judge had also approved class action status to the lawsuit. The July trial was expected to decide how much Apple will pay in damaged to the 33 state attorney generals and 16 class-action lawyers representing customers in 16 states, which could have been as much as $840 million.

Details of the agreement haven’t been disclosed, but the judge has ordered Apple and its adversaries to submit a filing seeking approval of their accord within one month.

[via Bloomberg]