US Justice Department Warns Apple and Publishers of Antitrust Lawsuit over E-books Pricing!

By on March 10, 2012

The U.S. Department of Justice has already confirmed that they are carrying out an antitrust investigation into the new “agency model” of e-book pricing designed by Apple well before of its iBookstore launch, the new model asks the publishers to set the retail prices of their books but prohibits them to sell those books to other retailers at relatively cheap prices. Noticeably, Apple is also facing a similar sort of investigation in Europe as well.

Now the WSJ reports that  the Department of Justice recently warned Apple and five e-book publishers that it aims to file an antitrust lawsuit against them on the basis of their intention to plot a plan for raising the prices of e-books to earn massive pretty bucks unfairly.

Several of the parties have held talks to settle the antitrust case and head off a potentially damaging court battle, these people said. If successful, such a settlement could have wide-ranging repercussions for the industry, potentially leading to cheaper e-books for consumers. However, not every publisher is in settlement discussions. 

The five publishers facing a potential suit are CBS Corp.’s Simon & Schuster Inc.; Lagardere SCA’s Hachette Book Group; Pearson PLC’s Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers Inc., a unit of News Corp. , which also owns The Wall Street Journal.

The new Apple agency model is an eye candy for majority of publishers who are now signing Apple’s agency model for earning huge profits since it provides them a decent control over the pricing of their e-books. Usually, the first sign their deals with apple, then contact with Amazon and other e-books retailers forcing them to have a deal with them on similar pricing , if they obey their command eventually the raise their prices otherwise they threat the online retailers to withhold their books from those stores.

 

The Justice Department believes that Apple and the publishers acted in concert to raise prices across the industry, and is prepared to sue them for violating federal antitrust laws, the people familiar with the matter said. 

The publishers have denied acting jointly to raise prices. They have told investigators that the shift to agency pricing enhanced competition in the industry by allowing more electronic booksellers to thrive.

However, many tech experts believe that Apple’s new agency model in fact shatters the Amazon dominancy over e-books business on the web with sky-touching huge profits,………encouraging a healthy competition between the companies. With the introduction of new agency model by Apple, establishing greater price evenness across retailers and promoting companies to be more competitive in the e-books marketplace.

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