Yesterday, the Department of Justice filed an antitrust suit against Apple and five major publishing companies (Hachette, HarperCollins, Macmillan, Penguin Group and Simon & Schuster) regarding the defendants’ practices with regard to e-books. The DOJ Complaint, available here, alleges that the publishers and Apple conspired to set pricing for e-books in violation of Section 1 of the Sherman Act through the publisher defendants’ adoption in 2010 of the much-discussed “agency” model, whereby e-book pricing is set by publishers, with retailers serving as agents.
The DOJ simultaneously filed a proposed settlement of claims against Hachette, HarperCollins and Simon & Schuster. If approved, the settlement would in part prohibit the settling publishers from “enter[ing] into any agreement with any E-book Retailer that restrict, limits, or impedes the E-book Retailer from setting, altering, or reducing the Retail Price of one or more E-books” for a period of two years. Notably, the proposed settlement agreement would not require the publishers to abandon the agency model altogether.