Publishers and Apple want delay in settlement agreements

16.08.12 | Philip Jones

Publishers and Apple fighting the US’ Department of Justice over agency pricing have hit back, with new filings submitted to the Southern District of New York on Wednesday afternoon (15th August) calling on the trial judge to deny the government’s efforts to ratify the settlement agreements, or defer ruling on them until after trial.

Though it is not clear how much these latest briefs will sway Judge Denise Cote’s decision-making, the submissions do add new colour to the proceedings, with Penguin’s response beginning: “The Emperor has no clothes.”  Interestingly, though Judge Cote had previously asked the parties to set out their opposition to the settlement agreements during the public comments period, they have done so in these new submissions in response to the government’s request for the court to wave through consent.

Most serious is Apple’s assertion that its agency agreements with the settling publishers— Simon & Schuster, Hachette Book Group USA, and HarperCollins—cannot be terminated without a trial: “The Government is seeking to impose a remedy on Apple before there has been any finding of an antitrust violation.”

But Penguin and Macmillan also argued against “consent” being given, claiming that the new deals were not in the “public interest”. Penguin said the settlement agreements were “far from typical and reach beyond its claims against the Settling Defendants to impose a regulatory scheme on industry participants who have nothing whatsoever to do with the claims in this litigation”. Macmillan argued that the DOJ’s analysis was faulty, suggesting that the “DOJ’s cavalier assumption that its settlement terms will not result in re-monopolization is also mere ‘speculation’”.

Central to their arguments was the view, as put forward by Penguin, that the DOJ was “cherry-picking” e-book pricing data to support its case and ignoring wider market data. Macmillan argued that the government had “Failed to Consider the Negative Consequences of the Proposed Final Judgment” [sic].

Both Penguin and Macmillan maintained that there was no evidence that e-book prices rose during the period that agency existed, as had been the DOJ’s contention. Macmillan said that the government had not provided “a single economic study or analysis showing why its mandated pricing scheme is necessary to undo the effects of the alleged collusion, or why it is in ‘the public interest’.”

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Memo to DOJ: Drop the Apple E-Books Suit

Restoring Amazon’s monopoly in digital publishing is not in the public interest.

By CHARLES E. SCHUMER

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.

All of us will lose the vibrant resources a diverse publishing universe provides. As Scott Turow, president of the Author’s Guild, has explained, the Justice Department’s suit is “grim news for everyone who cherishes a rich literary culture.” These losses will be particularly felt in New York, which is home not only to many publishers, but also to a burgeoning digital innovation industry.

The e-books marketplace provides a perfect example of the challenges traditional industries face in adapting to the Internet economy. Amazon took an early lead in e-book sales, capturing 90% of the retail market. Because of its large product catalog, Amazon could afford to sell e-books below cost.

This model may have served Amazon well, but it put publishers and authors at a distinct disadvantage as they continued to try to market paper books and pave a way forward for a digital future. Without viable retail competitors, publishers were forced to make a Hobson’s choice. They could allow their books to be sold at the prices Amazon set, thus undercutting their own current hardcopy sales and the future pricing expectations for digital books—or stay out of the e-books market entirely. In an increasingly digital age, the latter was simply not an option.

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US independents urge DoJ to protect agency model

A group of independent publishers in America have written to the Department of Justice in support of the agency agreement, warning that abolishing it would reduce competition in the market.

The nine indie presses – including Grove/Atlantic, W. W. Norton and Perseus Books Group – joined forces to warn that the DOJ abolishing the agency agreement would lead to Amazon taking a monopoly in the e-bookselling market because it sold e-books at below cost.

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