Connecticut Attorney General Richard Blumenthal is investigating agreements between the country's largest e-book publishers and two leading digital retailers - Amazon.com, Inc. and Apple, Inc. The probe follows a similar examination opened in June by the attorney general of Texas.
According to the Attorney General, both Amazon and Apple have reached agreements with the largest e-book publishers that ensure both will receive the best prices for e-books over any competitors. In letters to Amazon.Com and Apple, Blumenthal is calling on the companies to meet with his office to address these concerns. Publishers that have reached such agreements with Amazon and Apple include Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin.
Apple, Amazon and the five publishers have also agreed to an 'agency pricing' model under which, publishers set their own retail prices. They receive 70 per cent of the consumer price, with the retailers taking 30 per cent. These agreements appear to have already resulted in uniform prices for many of the most popular e-books, potentially depriving consumers of competitive prices.
After a preliminary review, Blumenthal's office has already found that e-book prices offered by Amazon, Apple, Borders and Barnes & Noble for several New York Times Bestseller books were identical among all four sellers.
The e-book market is set to explode, with analysts predicting that e-book readers will be among the holiday season's biggest electronic gifts. Amazon and Apple combined will likely command the greatest share of the retail e-book market, allowing their most-favored-nation clauses to effectively set the floor prices for the most popular e-books. Such agreements, especially when offered to two of the largest e-book retail competitors in the US, threaten to encourage coordinated pricing and discourage discounting, Blumenthal has said.
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