Now in Legal Rebels:
Posted Apr 12, 2012 11:41 am CDT
The U.S. Department of Justice filed an antitrust suit against Apple and five publishers on Wednesday alleging they conspired to address what one executive called “the wretched $9.99 price point” for e-books.
The suit centers on a change from wholesale pricing, in which publishers charge retailers about half the cover price for a book and allow them to set prices, the New York Times blog Media Decoder reports. The new model adopted, agency pricing, gave Apple a 30 percent commission on sales and required publishers to use the same method with Amazon and other retailers, the suit says. The Wall Street Journal (sub. req.), The Wall Street Journal Law Blog, the New York Times and The BLT: The Blog of Legal Times also have stories.
Amazon’s charge of $9.99 was often below its cost, the Wall Street Journal says. Under the new pricing agreement, prices of books were often set at $12.99 and $14.99, the suit says. Supporters said Amazon’s low prices were killing off competition and allowing it to gain market share. Legal thriller writer Scott Turow argued in an open letter last month that the Justice Department was “on the verge of killing real competition in order to save the appearance of competition.”
According to the Media Decoder, the Justice Department complaint used language “that could have been inspired by a best-selling white-collar crime novel.” Executives met in private rooms at Picholine, Alto and other Manhattan restaurants, and issued instructions to “double-delete” emails.
Three of the publishers have settled. Meanwhile, 16 state attorneys general sued on Wednesday in an effort to recover damages for consumers.