Pa. Attorney General joins antitrust action over e-book price fixing scheme

Pennsylvania Attorney General Linda Kelly announced Wednesday that her office has joined 14 other states and Puerto Rico in a lawsuit charging three of the country’s largest book publishers and computer giant Apple Inc. with scheming to fix the sale prices of electronic books.

In a statement, Kelly said the antitrust action stemmed from a two-year investigation into allegations that book publishers Penguin, Simon & Schuster and Macmillan conspired with other publishers and Apple to artificially raise prices of electronic books, also known as e-books.

The states’ collective civil action seeks injunctive relief to reverse the effects of the defendants’ “anti-competitive” conduct, the statement says, as well as damages for consumers who paid the inflated electronic book prices.

The statement noted that prosecutors have already reached an agreement with two other book publishers, Harper Collins and Hachette, which would provide consumer restitution and injunctive relief.

The multi-state lawsuit alleges that the defendant publishers colluded to eliminate free market competition when they granted themselves the ability to set e-book prices as opposed to allowing the marketplace to determine the pricing.

For years, retailers themselves have been setting the prices of electronic books through what Kelly’s office says is a traditional wholesale distribution model.

The lawsuit states that the cost of New York Times bestselling electronic books rose from $9.99 to as much as $14.99 per book after Apple and the various publishers agreed that the e-books would be priced on an agency basis.

Prices of those books not on the best selling list also rose dramatically.

According to Kelly, the book publisher’s party to the litigation and Apple used contract terms that forced e-book outlets to sell their products at the same price, which virtually eliminated competition and resulted in consumers paying more than $100 million in overcharges.

In addition to Pennsylvania and the commonwealth of Puerto Rico, the other states involved in the litigation are Texas, Connecticut, Alaska, Arizona, Colorado, Illinois, Iowa, Maryland, Missouri, Ohio, South Dakota, Tennessee, Vermont and West Virginia.