Macmillan Publishers

Two 'Macmillan Publishers' stories April 2012 - May 2012

Apple’s legal response to DOJ in eBook price-fixing case

Ars Technica posted Apple’s legal response (PDF) to the U.S. Department of Justice’s lawsuit against the Cupertino, Calif.-based Company, and six publishers, for allegedly conspiring to fix eBook prices. In the document, Apple condemned the federal government for siding with “monopoly, rather than competition,” and then called the Department of Justice’s complaint “fundamentally flawed as a matter of fact and law.”

Phrases like “false” and “absurd” appear throughout Apple’s response to the accusations, which parallels the company’s statement from April, in regards to the suit’s filing, where Apple essentially said it is breaking monopolies, rather than starting them. Daring Fireball cropped this little nugget from the legal response that summarizes the entire 31-page document:

The Government sides with monopoly, rather than competition, in bringing this case. The Government starts from the false premise that an eBooks “market” was characterized by “robust price competition” prior to Apple’s entry. This ignores a simple and incontrovertible fact: before 2010, there was no real competition, there was only Amazon. At the time Apple entered the market, Amazon sold nearly nine out of every ten eBooks, and its power over price and product selection was nearly absolute. Apple’s entry spurred tremendous growth in eBook titles, range and variety of offerings, sales, and improved quality of the eBook reading experience. This is evidence of a dynamic, competitive market. These inconvenient facts are ignored in the Complaint. Instead, the Government focuses on increased prices for a handful of titles. The Complaint does not allege that all eBook prices, or even most eBook prices, increased after Apple entered the market.

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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