Law firm Hagens Berman has reportedly filed a class-action lawsuit in the US, alleging that Apple and five major publishers ‘colluded ... to illegally fix prices’ of e-books. The five publishers include HarperCollins, Macmillan, Simon & Schuster, Penguin and Hachette Book Group.
Filed in the California northern district court, the lawsuit claims that the publishers conspired with Apple to increase e-book prices in order to increase profits and compel e-book rival Amazon to abandon its pro-consumer discount pricing. It further claims that this is in violation of a variety of federal and state antitrust laws.
The complaint centres on the agency model – used by Apple for iTunes and by most major publishers for e-book sales – in which the publisher, rather than the retailer, sets the retail price of e-books. The model has already sparked investigations in Europe and the UK. The UK’s Office of Fair Trading is investigating whether certain publisher-retailer arrangements ‘may breach competition law.’ The European commission is also looking into whether companies have colluded to keep e-book prices high.
Naming two plaintiffs, California resident Anthony Petru and Mississippi resident Marcus Mathis – both of whom purchased at least one e-book for over $9.99 after the adoption of the agency pricing model – the lawsuit, once approved, will represent any purchaser of an e-book by a major publisher after the adoption of the agency model. According to Hagens Berman, it could be worth ‘tens of millions of dollars’.
The lawsuit alleges that the five publishers "feared" Amazon's move to price e-books at $9.99. The pricing ‘threatened to disrupt the publishers' long-established brick-and-mortar model faster than they were willing to accept", and to set low consumer expectations for e-book prices.
The lawsuit says the five publishers ‘forced’ Amazon to abandon its discount pricing and adhere to a new agency model. If Amazon attempted to sell e-books below the publisher-set levels, the publishers would simply deny Amazon access to the title. This has, the suit says, seen the prices of new e-books increase to an average of $12-15 – a rise of 33-50% – and reach a point where they are often more expensive than physical editions.
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