Analysts: Apple has a strong case in DOJ’s lawsuit over eBook price-fixing

Yesterday, the U.S. Department of Justice filed a lawsuit against Apple and five other publishers over eBook price-fixing. The Department of Justice reached a settlement with three of the publishers in the suit, but Apple, MacMillan, and Penguin are standing strong (the U.S. is also after Simon and Shuster). Yesterday, MacMillan’s CEO released a letter on the matter and explained why the publisher chose not to settle. In the note, he said the Department of Justice’s settlement demands “could have allowed Amazon to recover the monopoly position it had built before our switch to the agency model.” He also said it is “hard to settle a lawsuit when you know you have done no wrong” and called the agency model the future of an “open and competitive market.”

As CNET noted, the Department of Justice may have a more difficult case against Apple. For one, Apple does not have a strong-hold in the eBook market, because Amazon has the commanding lead with its Kindle sales. The Department of Justice has a case against the publishers rather—and that is most likely why three of them have already chosen to settle. Apple only holds open the store, while publishers are the ones who choose the prices to set.

The settlement reached with three of the publishers yesterday is said to give them “freedom to reduce the prices of their e-book titles,” which allows Amazon to go back to its previous wholesale model.

A key point that the Department of Justice is using in its lawsuit is when all five of the publishers met together at a hotel in London to talk over eBook prices. Apple was not present at the meeting, so this may give the Department of Justice a harder time to press the Cupertino-based Company. Of course, the Department of Justice could still come out victorious, but it may have to dig a little deeper against Apple than it did with publishers. We are sure there will be more out of this case as time goes on.

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DOJ explains settlement with three publishers, Macmillan CEO explains why they won’t settle

The U.S. Department of Justice and Attorney Gen. Eric Holder just announced (via CNN) a settlement with three publishers—Hachette, HarperCollins, and Simon & Schuster— following this morning’s report that it would launch an antitrust suit against Apple, Macmillan, and Penguin, which refused to settle. The settlement is said to give publishers the “freedom to reduce the prices of their e-book titles,” allowing Amazon to return to its previous wholesale model.

The states are seeking $51 million in restitution that will be provided through a credit toward a future book purchase or a check, although the Department of Justice’s charges remain civil. The exact details of the settlements with the three publishers were not discussed, but Apple, Penguin, and Macmillan will continue to fight charges in the lawsuit filed earlier today in New York.

As for exactly why Apple and the two other publishers have decided to take the case to court, at least one publisher is speaking. Macmillan’s Chief Executive Officer John Sargent published an open letter today explaining the company’s stance (via PaidContent). In the letter, Sargent claimed the Department of Justice’s settlement demands “could have allowed Amazon to recover the monopoly position it had built before our switch to the agency model.” He also said it is “hard to settle a lawsuit when you know you have done no wrong” and called the agency model the future of an “open and competitive market.”

Interestingly, AllThingsD pointed us to a line from the Department of Justice’s official complaint that indicates Apple proposed teaming up with Amazon at one point:

In addition to considering competitive entry at that time, though, Apple also contemplated illegally dividing the digital content world with Amazon, allowing each to “own the category” of its choice—audio/video to Apple and e-books to Amazon.

Go past the break for Sargent’s full letter, which is a great rundown of the case from the perspective of the publishers that have decided not to settle:
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AT&T- T-Mobile Merger looks to be over, companies pursuing a tactical workaround


Image via ARS

Big news today (surprisingly on a 4 day US weekend).  The AT&T and T-Mobile merger was withdrawn from the FCC today.

 On November 23, 2011, AT&T Inc. and Deutsche Telekom AG electronically withdrew without prejudice, as of that date, the pending applications listed in the Public Notice released by the Federal Communications Commission on April 28, 2011 in that proceeding. Associated manual notification of withdrawal filings also are being made.

The two companies look to be pursuing an alternative plan… Read more

Verizon CEO McAdam makes best/worst case yet for ‘AT&T-Mobile’ merger


Verizon Wireless CEO Lowell McAdam

At an investor conference yesterday, Verizon CEO Lowell McAdam made the simple argument:

I have taken the position that the AT&T merger with T-Mobile was kind of like gravity. It had to occur, because you had a company with a T-Mobile that had the spectrum but didn’t have the capital to build it out. AT&T needed the spectrum, they didn’t have it in order to take care of their customers, and so that match had to occur.

I don’t think that I’ve heard a rationale for the merger stated more succinctly.

But coming from AT&T and T-Mobile’s biggest rival, you know it is a bunch of horses**t.

Since when does a company CEO say something to the effect of “We want our competitors to be stronger and better equipped to compete with us and take our customers”?

The reason why Verizon is in favor of the deal is because it eliminates a low-cost player in the market and brings the U.S. closer to a telecom duopoly, in which AT&T and Verizon can set prices.  Just recently, Verizon was forced to offer a $50 pre-paid data plan that competes with Sprint’s Virgin and T-Mobile.  With Verizon/AT&T running the show, they won’t need to make moves like that.

It’s pretty obvious to anyone not on an AT&T or Verizon payroll (including fifteen members of Congress led by North Carolina’s Heath Shuler) that a merger would be horrific for wireless competition in this country.

No one with an eighth-grade education really believes that any merger, telecom or otherwise, has ever created jobs or competition in the marketplace which is what AT&T is somehow trying to argue. Hopefully this thing is killed. Soon.
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Chair of the Senate’s Antitrust Subcommitteee seeks to block AT&T – T-Mobile merger

Sen. Herb Kohl, D-Wis., who chairs the Senate’s Antitrust Subcommitteee, is calling for regulators to block the proposed merger of AT&T and T-Mobile:

 “I have concluded that this acquisition, if permitted to proceed, would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked by your agencies.”

Top Democrats in the House also viewed the merger unfavorably:

“We believe that AT&T’s acquisition of T-Mobile would be a troubling backward step in federal public policy–a retrenchment from nearly two decades of promoting competition and open markets to acceptance of a duopoly in the wireless marketplace,” House Energy and Commerce Communications and Technology Subcommittee Chairwoman Anna Eshoo, D-Calif., Rep. Edward Markey, D-Mass., and House Judiciary ranking member John Conyers, D-Mich., wrote in their letter to FCC and the Justice Department. “Such industry consolidation could reduce competition and increase consumer costs at a time our country can least afford it.”

Not exactly what AT&T wants to hear.  T-Mobile, if it gets out of this AT&T merger, also gets a $3+B check from AT&T for the dance. Read more