US Brings Case Against Apple and Five Book Publishers Over Electronic Books
The United States says technology company Apple and book publishers illegally fixed prices of electronic books, or e-books. The Department of Justice took legal action on Wednesday in federal court in New York City.
The same day, Attorney General Eric Holder spoke in Washington about the case against Apple and the book publishers. The publishers are Hachette, HarperCollins, MacMillan, Penguin and Simon & Schuster.
Mr. Holder said e-books are changing the way Americans share information. He said the Department of Justice wants to make sure Americans can buy e-books at a fair price. He said the case was part of that effort.
ERIC HOLDER: "As part of this commitment, the Department has reached a settlement with three of the nation's largest book publishers – and will continue to litigate against Apple, and two additional leading publishers – for conspiring to increase the prices that consumers pay for e-books."
The Justice Department says Apple and the five publishers made an illegal deal to set higher prices for electronic books. It says, because of this, Americans paid millions of dollars more than they should have.
The dispute centers on the influence of Amazon.com. The Internet store had been selling e-books for nine dollars and ninety-nine cents. But the government says Apple made a deal with the publishers two years ago as it prepared to launch the iPad tablet computer. The deal guaranteed Apple thirty percent of the money earned on each e-book sold. It also created a pricing model that required stores to sell at a price set by the publishers and Apple. The price was several dollars higher than the one offered by Amazon.
Acting Assistant Attorney General Sharis Pozen noted that businesses can set their own prices. But she also said:
SHARIS POZEN: "Let me be clear, when companies get together and conspire to enter into agreements that eliminate price competition, it crosses the line. This kind of agreement is illegal and anticompetitive. That's when the Antitrust Division will take action, and that's what we've done today."
Sharis Pozen added that company officials knew what they were doing at the time. That included former Apple chief Steve Jobs.
Antitrust laws aim to halt business methods that crush competition. Hachette, HarperCollins and Simon & Schuster have agreed to a settlement. It says they must repay millions of dollars and stop giving Apple special treatment.
Sixteen states and Puerto Rico are also bringing their own case. Apple and British publishers McMillan and Penguin have decided to go to court.