The US Justice Department has plans to bring legal action against Apple and the major book publishers, alleging that the companies colluded to raise prices of electronic books.
Simon & Schuster, Hatchette Book Group, Penguin, Macmillan, HarperCollins are apparently in the firing line for the antitrust action according to sources first quoted by the Wall Street Journal. At least some of the publishers have been in negotiations to settle before the DoJ gets heavy.
The core of the dispute is the introduction of the so-called "agency" model which shifted the setting of prices to publishers rather than retailers. The move coincided with the launch of the Apple iPad and continues to result in eBooks often costing more than their dead-tree equivalents.
Late last year European antitrust authorities also announced an investigation into the same companies for exactly the same reason.
The late Steve Jobs own biography appears to represent something of a smoking gun as far as price fixing collusion. In Walter Isaacson’s biography, Jobs said that Apple was aware of publishers concern regarding the dominating influence of Amazon and their deep discounting.
Jobs said that the firm told book publishers: "We’ll go to the agency model, where you set the price, and we get our 30 percent and yes, the customer pays a little more," either unaware or uncaring that such a price-raising strategy would be illegal under many antitrust laws worldwide.
He went on to acknowledge that the publishers then approached Amazon with the demand that the etail giant sign up to an agency contract or they would be unable to sell any electronic books.