In a press
statement released Friday, Nevada Attorney General Catherine Cortez Masto
announced that Hachette Book Group, CBS Corp's Simon & Schuster and News
Corp.'s HarperCollins Publishers - three of the so-called “Agency Five”
publishers, the other two being Macmillan and Penguin - which have been named
along with Apple Inc. in government antitrust lawsuits alleging illegal e-book
price-fixing conspiracy have agreed to a multi-million dollar settlement with
the Department of Justice and fifty-four states and territories including the
District of Columbia.
Subject to
court approval, the settlement would eliminate Apple’s “most favored nation”
status with the publishers. According to Masto, the three big publishers also
agreed to pay a total of more than $69 million to compensate consumers who
purchased e-books during the period of April 1, 2010 through May 21, 2012.
Payments will begin 30 days after court approval of the settlement becomes
final. Consumers in Nevada are
collectively expected to receive up to $600,000 in total compensation. Eligible
Nevada consumers will receive funds in the form of a credit or check from the
settlement’s proceeds. Consumers who are eligible will receive direct notice by
email. Notice will also be published in
print and web media. A web site, created
and maintained by a claims administer, will also be available providing
detailed information on the settlement, Masto’s office announced. The three
publishers likewise agreed to pay approximately $7.5 million to the states for
fees and costs.
The
antitrust lawsuits came about as a result of a probe conducted by DOJ on deals
made by Apple with the “Agency Five” publishers two years ago when it launched
the iPad and entered into direct competition with Amazon.com and Barnes &
Noble. Apple used an “agency model" in its e-book pricing strategy whereby
publishers set prices and Apple would take a 30 percent commission. In theory,
that pricing model should stimulate competition and encourage varied pricing
among the publishers. However, the prosecutors maintain that the parties may
have conspired or worked in concert to set or fix the prices of e-books with
Apple acting as the "hub" of coordination. They contend that by moving from a "wholesale model" to
an "agency model," and through collaboration with Apple, the
publishers allegedly ended retail price competition. The lawsuit accuses Apple
of facilitating the transition with the clear understanding that it would
result in higher prices. The complaint in fact quotes the late Steve Jobs as
saying, "We'll go to [an] agency
model, where you set the price, and we get our 30%, and yes, the customer pays
a little more, but that's what you want anyway."
Recently,
the DOJ has been taking on large tech companies like Apple to force some policy
changes. Most notably, in 2010 it was
able to come to a deal with Apple, Google, Pixar, and others to terminate their
"no employee poaching" agreements with each other under threat of a
possible lawsuit.