U.S. Justice Dept may sue Apple, publishers on e-book pricing

The U.S. Justice Department has warned Apple and five of the biggest U.S. publishers that it plans to sue them, accusing them of colluding to raise the prices of electronic books, the Wall Street Journal said, citing people familiar with the matter. Several parties have held talks to settle the potential anti-trust case, the paper cited the people as saying. It added that a successful settlement could lead to cheaper e-books for consumers.

To be sued? 

However, not all publishers are in settlement discussions, the Journal said. The five publishers identified in the Journal report are Simon & Schuster Inc, a unit of CBS Corp , 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 . News Corp also owns the Wall Street Journal.

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Representatives for the five publishers, Apple and the Justice Department declined to comment to the Journal. Reuters could not reach any of the parties for comment outside of regular U.S. business hours.

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

Under the “agency model”, publishers would set the price of the book and Apple would take a 30 percent cut. Apple also specified that publishers could not let rival retailers sell the same book at a lower price.

Amazon Inc , the early pioneer in e-books, had sold many new best sellers at $9.99 to encourage consumers to buy its Kindle electronic readers. But the company’s pricing strategy had ruffled the feathers of many publishers.

Reuters