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Key US Senator Wants DOJ To Stop Investigating Apple Over Alleged E-Book Price Fixing

Key US Senator Wants DOJ To Stop Investigating Apple Over Alleged E-Book Price Fixing

July 18, 2012

In a surprising move, a key U.S. senator is asking the Department of Justice to drop their suit against Apple over alleged e-book price fixing. Sen. Chuck Schumer claims that by going forward with their lawsuit, the DOJ will allow Amazon to control the e-book market. Schumer made his comments in an op-ed piece in The Wall Street Journal.

In April, the DOJ filed an antitrust lawsuit against Apple and five of the nation’s largest publishers. The government alleges that the parties conspired to limit competition for the pricing of e-books.

According to the lawsuit, filed in Manhattan federal court, the companies decided collectively to end retail price competition and in doing so, guaranteed Apple’s 30 percent commission on each e-book sold.

The case revolves around the use of an agency model, where publishers, not retailers set the price for each book and e-book sold.

In addition to Apple, the companies targeted included: Penguin Group, Macmillan, Simon & Schuster Inc., HarperCollins Publishers Inc., and Hachette.

Since then, the DOJ reached settlements with Hachette, HarperCollins, and Simon & Schuster over the e-book price fixing allegations.

In June, Apple claimed Amazon is the true “market power” over e-book pricing.

After all, Apple claims, they entered the e-book retail business with “no market share” and that part of its motivation to start an iBookstore was to “generate revenue and profits for the corporation and its shareholders and to avoid negative margins that it believed Amazon was incurring as it sold certain bestselling e-books below cost, but Apple denies that it sought to do so by ‘driving prices’ above $9.99.”

Schumer seems to agree with Apple’s position.

In his post, the senior senator from New York states:

Recently the Department of Justice filed suit against Apple and major publishers, alleging that they colluded to raise prices in the digital books market. While the claim sounds plausible on its face, the suit could wipe out the publishing industry as we know it, making it much harder for young authors to get published.

The suit will restore Amazon to the dominant position atop the e-books market it occupied for years before competition arrived in the form of Apple. If that happens, consumers will be forced to accept whatever prices Amazon sets.

In making his comments, Schumer pressed the Justice Department to “reassess its prosecution priorities” and implore guidelines before filing antitrust suits in the future.

I continue to be amazed that the government thinks that Apple, and not Amazon, is trying to control the U.S. book selling market. It is Amazon, after all, that has so dominated the industry in recent years that it has lead to the closing of many brick and mortar book stores such as Borders. Apple, meanwhile, only joined the market a few years ago.

Source: The Wall Street Journal
Photo: The Western Center For Journalism