U.S. Sues Apple, Publishers Over E-Book Pricing
By CHAD BRAY And BRENT KENDALL
NEW YORK—The U.S. filed an antitrust lawsuit Wednesday against Apple Inc. and five of the nation's largest publishers, alleging they conspired to limit competition for the pricing of e-books.
The lawsuit, filed in Manhattan federal court by the U.S. Department of Justice's Antitrust Division, alleges Apple and the publishers reached an agreement where retail price competition would cease, retail e-books prices would increase significantly and Apple would be guarantee a 30% "commission" on each e-book sold.
A settlement involving some of the publishers is expected to be filed Wednesday, according to a person familiar with the matter. U.S. Attorney General Eric Holder is expected to discuss "a significant antitrust matter" at a press conference later Wednesday.
"Defendants' ongoing conspiracy and agreement have caused e-book consumers to pay tens of millions of dollars more for e-books than they otherwise would have paid," the lawsuit said.
The agreement between Apple and the publishers allegedly occurred ahead of the introduction of the iPad in 2010 and as Amazon.com Inc. had driven e-book pricing down to $9.99 for newly released and best-selling e-books, according to the lawsuit.
In achieve their goal, the publishers shifted from a "wholesale" model to sell books and e-books and replaced it with a so-called agency model, in which the publishers would set the retail price and give retailers no power to alter that price, the Justice Department said in the lawsuit.
Talks to resolve the price-fixing probe have been heating up in recent weeks, with three publishers inclined to settle the allegations: CBS Corp.'s Simon & Schuster Inc., HarperCollins Publishers Inc. and Lagardere SCA's Hachette Book Group, according to people familiar with the matter.
The Justice Department didn't immediately have a comment when reached on Wednesday.
The publishers named in the lawsuit are: Simon & Schuster, HarperCollins, Hachette, Pearson PLC's Penguin Group (USA) and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH.
HarperCollins is owned by News Corp., as is The Wall Street Journal.
—Thomas Catan contributed to this article.
Write to Chad Bray at chad.bray@wsj.com
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