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Apple, booksellers oppose proposed e-book price-fixing settlement

Grant Gross | July 24, 2012
A proposed settlement of the U.S. Department of Justice's e-book price-fixing case against three large publishers would damage the U.S. publishing industry and would single out Apple for restrictions on e-book pricing, lawyers for the tech firm wrote in comments to the agency.

"Many critics of the settlements view the consequences of the conspiracy -- higher prices -- as serving their own self-interests, and they prefer that unfettered competition be replaced by industry collusion that places the welfare of certain firms over that of the public," the DOJ's lawyers wrote. "That position is wholly at odds with the purposes of the federal antitrust laws -- which were enacted to protect competition, not competitors."

Apple complained that the settlement would require it to renegotiate e-book prices with the settling publishers in a seven-day period. "This artificially compressed time frame is not a foundation for a productive, long-term relationship," Apple's lawyers wrote. "There is a risk that the settling defendants will refuse to negotiate commercially reasonable terms and simply pull their titles from the iBookstore. That would be flatly against the public interest."

Apple called the settlement an "experiment in government intervention."

The Consumer Federation argued in favor of the proposed settlement, saying the so-called agency pricing model employed by Apple and the publishers unnaturally props up the declining specialty bookstore industry. The Authors Guild has argued that specialty bookstores allow customers to browse shelves in a way that's superior to browsing for books online, the consumer group noted.

The only way to save an old model of selling books in specialty bookstores is "by ending price competition and allowing collusion to set prices," the group's lawyers wrote. "Unfortunately for the bookstores, the readers who need the functions of the specialty bookstores don't value them enough to pay for the services they provide. Since the specialty bookstores cannot compete on price or service, cartel agency pricing is the only solution, a solution in which consumers are forced to pay a higher price, but get services that they are unwilling to pay for."


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