DOJ Strikes at Apple and Case Critics
The U.S. Department of Justice has reacted after several commentators came out in support of Apple (NASDAQ:AAPL) and against the government in the e-book price-determination case. The department said in a Monday filing with a federal court in New York that critics of the case as well as its settlement with the three publishers were simply trying to protect their own profits.
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The department filed a lawsuit against Apple and five publishers in April, accusing them of colluding to raise the price of e-books. Three publishers — Hachette, HarperCollins (NASDAQ:NWSA), and Simon & Schuster (NYSE:CBS) — agreed to settle, while Macmillan and Penguin Group (NYSE:PSO) are fighting the charges with Apple.
According to lawsuit, Apple and the publishers were unhappy that Amazon (NASDAQ:AMZN) had brought down prices of e-books to $9.99, and, in response, set up the agency model that allowed publishers and not bookstores to set prices. The settlement with the three publishers requires them to abandon their agency-pricing agreements with Apple and other retailers.
“Many critics of the settlements view the consequences of the conspiracy — higher prices — as serving their own self-interests, and they prefer that unfettered competition be replaced by industry collusion that places the welfare of certain firms over that of the public,” the department wrote on Monday, according to The Hill.
Several commentators, including Sen. Chuck Schumer (D-NY) who wrote an op-ed in the Wall Street Journal criticizing the Justice Department, have argued that the lawsuit and the proposed settlement will allow Amazon to regain dominance of the e-book industry and ultimately hurt consumers. Companies and associations, including Apple, Barnes & Noble (NYSE:BKS), and the Authors Guild, have asked the court to scrap the planned settlement.
The Justice Department said on Monday that it was Barnes & Noble’s entry, and not the agency agreements, that most significantly eroded Amazon’s market share.
The department also defended its requirement from publishers to cancel exiting agreements and not make similar deals for two years. “This brief cooling-off period will ensure that the effects of the collusion will have evaporated before defendants seek future agency agreements, if any,” the agency wrote. “The proposed final judgment will help to restore competition, not end it,” it wrote.
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