01.Apple settles ebook collusion case
Tech giant Apple, enmeshed in legal action over ebook price-fixing in the US, has settled its suit with consumer groups and states.
But the company will continue an appeal of a verdict that last year found it guilty of colluding with five publishers to raise the price of ebooks. The terms of the agreement should be revealed later this year.
The settlement will mean Apple is likely to be liable for less than the $840m sought by 33 US states suing Apple on behalf of their consumers, and other individual consumers who sued Apple in a class action.
The story so far
In the lead-up to launching the iPad and iBooks in 2010, Apple made agreements with five major publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster. These agreements, known as the agency pricing model, allowed the publisher to set prices charged by retailers for their books. Before that, ebook retailers such as Amazon could set their own prices for ebooks, which allowed Amazon to sell new releases for $US9.99 (sometimes at a loss). After the introduction of the agency pricing model, ebook prices went up.
The US Department of Justice took Apple to court, arguing that its actions were anti-competitive and that the collusion with publishers amounted to antitrust, and won. The publishers reached a pre-trial settlement.
Apple argued it wanted to break Amazon’s monopoly in the ebook market and create more competition, and stated that Amazon’s pricing of ebooks was below cost, therefore crippling competition in the ebook market.