States start filing individual lawsuits against e-book publishers

Texas and Connecticut are leading a ring of more than a dozen states in an anti-trust suit against Apple and a few other book publishers over an "anti-competitive price-fixing scheme."

The battle over e-book pricing is getting even more heated as several states are joining together to file their own lawsuit against the major publishing houses.

Leading the way at the moment are the attorney general offices in Connecticut and Texas. Other local governments getting in on the action are Alaska, Arizona, Colorado, Illinois, Iowa, Maryland, Missouri, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Vermont and West Virginia and the Commonwealth of Puerto Rico.

The targets of the lawsuit are Apple along with its so-called "cartel" of e-book publishers, which now consists of Macmillan, Penguin, and CBS-owned Simon & Schuster. (For reference, ZDNet is also owned by CBS.)

In a statement published on Wednesday afternoon, Connecticut Attorney General George Jepsen explained the motivation behind this particular anti-trust lawsuit, filed in U.S. District Court in Texas:

The states’ complaint alleges that the defendants conspired to raise eBook prices. For years, retailers sold eBooks through a traditional wholesale distribution model, under which retailers – not publishers – set sales prices for eBooks. However, the states’ investigation found that Macmillan, Penguin and Simon & Schuster conspired with other publishers and Apple to artificially raise prices by imposing a distribution model in which the publishers set the prices for bestsellers at $12.99 and $14.99.

The complaint alleges that when Apple prepared to enter the eBook market, the publishers and Apple agreed to adopt an agency distribution model as a mechanism to allow them to fix prices. To enforce their price-fixing scheme, the publishers and Apple relied on contract terms that forced all eBook outlets to sell their products at the same price. Because the publishers agreed to use the same prices, retail price competition was eliminated.

Jespen acknowledged in the statement that "publishers deserve to make money, but consumers deserve the price benefits of competition in an open and unrestricted marketplace."

So far, Jespen and Texas Attorney General Greg Abbott were able to reach agreements with two other publishers: HarperCollins and Hachette.

Earlier today, the U.S. Department of Justice announced a civil lawsuit of its own in the Southern District of New York against Apple and all of the five aforementioned major international publishers for allegedly conspiring to fix the price of e-books in the face of resellers, such as Amazon and Barnes & Noble.

However, Hachette, HarperCollins and Simon & Schuster have all already agreed to a proposed settlement.

via TeleRead

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