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U.S. Files Antitrust Suit Against Apple Regarding eBook Prices

A month ago, Apple and five other publishers were warned that the U.S. Department of Justice was seeking a case for collusion and price fixing regarding eBook prices. Now, it would seem those warnings weren’t full of hot air, as the Department of Justice has officially filed a lawsuit against Apple, Hachette Book Group, Simon & Schuster, HarperCollins, Macmillan, and Penguin, claiming that these publishers colluded to fix eBook prices. Word on the people familiar with the matter street says Simon & Schuster, Hachette Book Group, and HarperCollins already settled their suits, but Apple and Macmillan have refused to engage in talks, and deny that they have participated in an collusion to fix eBook prices.

The argument Apple is said to make is that pricing agreements between Apple and publishers only enhance eBook industry competition, which was once dominated by a sole distributor, Amazon. Along with Apple and Macmillan, Penguin is also said to be prepared to fight the suit, as they want to protect the agency model — introduced by Apple — where publishers set the prices of eBooks rather than vendors, thus keeping publishers happy with the price of the eBook, since they’re generally cheaper than a tangible one.

The U.S. government isn’t seeking to set prices on their own thankfully, but are looking to return to a wholesale model, wherein retailers set the prices of books, not the publishers, which was the initial problem that Apple tried to circumvent by allowing publishers to set the prices with the agency model. Interestingly, Publishers Weekly claims that due to printing and shipping costs, the eBook generates a higher profit margin than a physical book.

Though the government wants to return to the wholesale model, the agency model may not be killed off entirely. Unfortunately, we’ll just have to wait and see where the case goes before we know the end result. Either way, the end result certainly looks like lower prices for eBooks, which should be welcomed by consumers.

(via Bloomberg)

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