DOJ files e-book price-fixing suit against Apple

CNET
Updated April 11, 2012 10:30 a.m. ET

(CNET) The U.S. Department of Justice has filed an antitrust lawsuit against Apple for alleged e-book price fixing Wednesday CNET has confirmed. 

Apple had reportedly been in talks with federal regulators but had failed to come to an agreement to settle their concerns. Along with Apple, five book publishers are also reportedly under investigation for price fixing: HarperCollins Publishers, Hachette Book Group, Macmillan Publishers, Penguin Group, and Simon & Schuster "colluded to increase prices" on popular books. (Simon & Schuster is owned by CBS.)

Apple representatives did not immediately respond to a request for comment. The Justice Department could not be reached for comment

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Some of the publishers under scrutiny are expected to settle with the Justice Department this week, two unidentified people familiar with the matter told Reuters.

The probe apparently stems from changes made to how publishers charge for e-books when Apple released the first iPad two years ago. Book publishers began using an "agency model" in which publishers set their own e-book prices, rather than the traditional wholesale model in which publishers set a retail price and retailers set their own sales price.

The pricing model materialized in 2010 after book publishers asked Amazon to increase the price of e-books on its Web site, but Amazon stood firm in its contention that anything above $9.99 was too high. Amazon eventually relented after many popular Macmillan titles disappeared from the e-tailer's site.

A lawsuit objecting to the pricing model was filed against Apple and the publishers last year. The plaintiffs alleged that they paid higher prices for their book purchases as a result of the agency model.

This article first appeared at CNET under the headline "Apple may face e-book price-fixing lawsuit tomorrow."

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    Steven Musil is the night news editor at CNET News. Before joining CNET News in 2000, Steven spent 10 years at various Bay Area newspapers. E-mail Steven.

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