Justice Department files anti-trust suit against Apple, publishers


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Justice Department files suit against Apple, publishers, report says

By Hayley Tsukayama, Updated: Wednesday, April 11, 7:34 AM

The U.S. Justice Department has filed a suit against Apple and five publishers, Bloomberg reported, alleging they have colluded over the price of e-books. Justice said Tuesday that it had a “significant antitrust announcement,” but did not specify the nature of the announcement.
The department has been looking into allegations that Apple and the publishers — Simon and Schuster, Hachette Book Group, Penguin Group, Macmillan and HarperCollins Publishers — have “engaged in a pattern of behavior that violates antitrust laws,” a person familiar with the investigation told The Washington Post last month.
According to the report, Apple and Macmillan are denying that they have engaged in settlement talks with the Justice Department, and argue that the deals between Apple and publishers helped to increase competition in the e-book market.

Acting antitrust head Sharis Pozen confirmed the investigation in a December congressional hearing, saying that the agency was looking into the e-book industry. The European Commission has undertaken a similar investigation.
The regulators are taking a close look at the deals between Apple and the book publishers, which allow the publishers to set the prices of books. In exchange, the technology giant gets a share of the proceeds from e-books sales.
This pricing model has given publishers leverage over Amazon, which tried to set book sales at $9.99 when it debuted the Kindle in 2007. Apple’s deal with publishers gave them leverage to change their deal with Amazon, the Post reported.
Sales of e-readers have been growing quickly in the United States and a recent survey from the Pew Internet and American Life Project found that one-fifth of all American adults have read an electronic version of a book in the past year.
E-reader ownership has increased to 21 percent from 17 percent between December and February, the Post reported, though the industry has had trouble converting that trend into profit.
Publishers have complained about pirated books and the complicated fees they must pay to have their titles sold online.
The market is expected to continue growing, with U.S. consumers expected to buy 381 million e-books next year — four times the amount of e-books purchased in 2010, according to a report from the research firm Yankee Group.