Apple to fight on in e-book price-fixing 'cartel' case

Summary:Apple, along with two other major international publishers, may avoid settling in a "cartel" e-book fixing antitrust investigation, while others seek a faster resolution.

While three accused publishers involved in a joint U.S. and EU antitrust investigation into "cartel" behaviour are reportedly close to reaching a settlement, Apple and two others may fight the claims.

Apple, along with the five named publishers, are accused of collaborating and conspiring to 'fix' e-book prices in a bid to undercut arch-nemesis Amazon, which has a different model for pricing the downloadable books.

The Wall Street Journal, citing sources in the know, say that the shiny rectangle maker Apple, and publishers Macmillan and Pearson are "reluctant" to follow suit with other publishers that hope to settle the matter before a formal antitrust investigation begins.

The remaining publishers include News Corp.-owned HarperCollins, Lagardere’s Hachette Livre, CBS-owned Simon & Schuster (ZDNet and Simon & Schuster are both owned by CBS), and are all expected to settle.

EU Competition Commissioner Joaquin Almunia said that the companies involved "know very well" under which conditions the European authorities were willing to settle, but warned: "If our conditions cannot be met in a satisfactory way, we will continue our investigation."

Amazon’s 'wholesale' pricing model ultimately allows for greater flexibility to e-book authors and sellers, allowing them to price what they like for their work --- even at a loss.

Apple's 'agency model' takes a 30 percent cut of each sale, but is accused of dodgy dealings with the publishers as part of its efforts to undermine Amazon's dominant place in the market.

While the U.S. Department of Justice is taking the heavy-handed approach and warned Apple et al to "prepare" for lawsuits, the European Commission was set to seek the easier option of settling the case, which could impose conditions on their business practices for a set period.

But by doing so, the companies would be admitting defeat, and most significantly, guilt.

European antitrust authorities began an investigation into the alleged practices after an investigation by UK trading authorities. If Apple and others are found in breach of European antitrust laws, they could face a 10 percent global annual turnover fine, which could run collectively into the tens of billions of dollars.

Apple was down 0.8 percent at market close, while e-book rival Amazon was down by 2.8 percent. Barnes & Noble closed at 2.2 percent down, and publisher Pearson closed 1.4 percent down. CBS Corp. and News Corp. were down by 2.5 percent and 2.6 percent respectively.

Image source: CNET.

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Topics: Hardware, Mobility

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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