Apple, major publishers hit with federal antitrust lawsuit over e-book pricing

Apple and several of the nation's largest book publishers were hit with a federal antitrust lawsuit on Wednesday for allegedly colluding to fix e-book prices. According to the complaint, filed by the U.S. Department of Justice, at least five publishers—Simon & Schuster, HarperCollins, Hachette, Penguin and Macmillan—conspired with Apple to fix prices for e-books ahead of the 2010 launch of the iPad tablet and iBookstore, forcing Amazon to raise prices for e-books on the rival Kindle. Simon & Schuster, HarperCollins and Hachette have already settled with the Justice Department. According to Bloomberg, Apple and Macmillan "have refused to engage in settlement talks" and "deny they colluded to raise prices for digital books." Penguin plans to fight the lawsuit too, Bloomberg said. Before the iPad came along, publishers had complained that Amazon's $9.99 price for e-books was too heavily discounted. When the iPad made its debut, most e-books sold by Apple were priced at $12.99, with the Cupertino, Calif.-based company allowing publishers to set their own prices—known as the "agency model." 

Amazon soon allowed publishers to set their own prices, too, driving up the prices of digital editions. "Apple facilitated the [publishers'] collective effort to end retail price competition by coordinating their transition to an agency model across all retailers," the suit alleges. A class action lawsuit filed in California District Court last summer by Kindle consumers was the first to allege a conspiracy, CNNMoney.com noted. According to that suit, "booksellers were 'terrified' by the discounted e-book price structure Amazon launched in 2007." The "spooked publishers" colluded with Apple to force Amazon's hand.