AGs reach $69M agreement with publishers over e-books

By Jessica M. Karmasek | Aug 30, 2012



AUSTIN, Texas (Legal Newsline) - Texas Attorney General Greg Abbott, Connecticut Attorney General George Jepsen and a group of more than 50 other attorneys general announced Wednesday they have secured a $69 million agreement with three major publishers over electronic book price-fixing allegations.

The agreement resolves a multistate antitrust investigation, conducted jointly by the U.S. Department of Justice's Antitrust Division and the states, against Hachette Book Group Inc., HarperCollins Publishers LLC and Simon and Schuster Inc.

Under national agreements led by Texas and Connecticut and joined by the attorneys general of 53 states, U.S. territories and the District of Columbia, the three publishers must modify their product distribution model and refund customers who overpaid for electronic books, or e-books, after major publishing houses conspired to artificially inflate prices.

Wednesday's settlement agreements with Hachette, HarperCollins and Simon and Schuster were filed with, and must be approved by, the U.S. District Court for the Southern District of New York.

"Unlawful collusion and price-fixing not only violates antitrust laws, it is anticompetitive and inconsistent with the free market approach that is critical to our economy," Abbott said in a statement.

"In this case, competition was undermined when publishers colluded to artificially set prices that should have been determined by the free market."

Jepsen agreed, saying while publishers are entitled to their profits, consumers are equally entitled to a fair and open marketplace.

"This settlement will provide restitution to those customers who were harmed by this price-fixing scheme, but it also will restore competition in the e-book market for consumers' long-term benefit," the attorney general said in a statement.

Filed simultaneously with the national settlements was an antitrust enforcement action against the same three publishers.

In that civil legal action, the defendants are charged with "conspir[ing] and agree[ing] to increase retail e-book prices for all consumers" and "agree[ing] to eliminate e-book retail price competition between e-book outlets, such that retail prices to consumers would be the same regardless of the outlet patronized by the consumer."

Texas' antitrust action based on the same allegations against publishers Macmillan and Penguin, as well as Apple Inc., remains pending.

The settlement terms with Hachette, HarperCollins and Simon and Schuster include:

- Compensation for customers who purchased e-books from any of the five publishers between April 1, 2010 and May 21, 2012;

- Payments beginning 30 days after the court approval of the settlement becomes final;

- Payment of about $7.5 million to the states for fees and costs; and

- Termination of existing agreements with certain e-book outlets and granting those outlets greater freedom to reduce the prices of their e-book titles.

The investigation into the e-book deals began back in 2010, when now U.S. Sen. Richard Blumenthal was Connecticut's top lawyer.

Blumenthal said at the time he feared that Amazon and Apple made deals with Simon and Schuster, Hachette, HarperCollins, Macmillan and Penguin, blocking competitors from offering cheaper e-book prices.

From Legal Newsline: Reach Jessica Karmasek by email at

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