Apple facing probe over book price-fixing

San Francisco - The US Justice Department has warned Apple that it plans to sue the company and five major US book publishers for colluding to fix the price of electronic books, the Wall Street Journal reported Thursday.

The publishers were named as Simon and Schuster; Hachette Book Group; Penguin Group (USA); Macmillan; and HarperCollins Publishers.

The report said that several of the parties have held talks to settle the antitrust case and avoid a court battle.

The suit focuses on an agreement between Apple and the publishers which was reached prior to the launch of the iPad in 2010. The deal allowed publishers to set whatever price they wanted for a book, while guaranteeing Apple a 30-per-cent cut and promising not to let rival retailers sell the same book for less.

The deal led to rise in the price of electronic books, because Amazon was no longer able to sell the books more cheaply as a way to promote material to its electronic readers.

According to the Justice Department, Apple’s deal with the publishers represented a collusion to raise prices across the industry in violation of federal antitrust laws.

-- The Nation 2012-03-09

This New Yorker article from nearly two years ago more or less documents the events that have lead to the Justice Department's allegations...

http://www.newyorker.com/reporting/2010/04/26/100426fa_fact_auletta

Publish or Perish Can the iPad topple the Kindle, and save the book business?

by Ken Auletta