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Aug 27 - Sept 3, 2012 Edition

Publishers to Pay $69 Million Price-Fixing Case

Authorlink News/August 30, 2012--Connecticut Attorney General George Jepsen along with 54 attorneys general in other states, districts and U.S. territories, announced yesterday that they have reached an antitrust settlement with three of the largest book publishers in the United States.

Hachette Book Group, Inc., HarperCollins Publishers L.L.C. and Simon & Schuster Inc. have agreed to pay a total of more than $69 million to consumers to resolve antitrust claims of an alleged unlawful conspiracy to fix the prices of electronic books (eBooks). They have also agreed to change the way they price eBooks going forward.

The settlement occurs in conjunction with a civil antitrust lawsuit filed today in U.S. District Court for the Southern District of New York against Hachette, HarperCollins, and Simon & Schuster, which alleges that the three settling publishers and others, including non-settling publishers Macmillan and Penguin (collectively, the “Agency Five” publishers), “conspired and agreed to increase retail eBook prices for all consumers” and “agreed to eliminate eBook retail price competition between eBook outlets, such that retail prices to consumers would be the same regardless of the outlet patronized by the consumer.”

“While publishers are entitled to their profits, consumers are equally entitled to a fair and open marketplace,” said Attorney General Jepsen. “This settlement will provide restitution to those customers who were harmed by this price-fixing scheme, but it also will restore competition in the eBook market for consumers’ long-term benefit.”

The lawsuit and today’s settlement stem from a two-year antitrust investigation conducted jointly by the U.S. Department of Justice’s Antitrust Division and the Connecticut and Texas Attorneys General. That investigation developed evidence that the Agency Five conspired to end eBook retailers' freedom to compete on price by taking control of pricing from eBook retailers and substantially increasing the prices that consumers paid for eBooks. The attorneys general said that the publishers prevented retail price competition resulting in consumers paying tens of millions of dollars more for their eBooks.

“This action sends a strong message that this sort of anticompetitive behavior will not be accepted Through our ongoing litigation, we hope to provide additional restitution to consumers,” Attorney General Jepsen said, “Additionally, I’m especially proud of the exemplary bipartisan cooperation on both the state and federal level on this matter, which involved 54 states and jurisdictions working together on behalf of consumers across the country.”

Under the proposed settlement agreement, which the court must approve, Hachette, HarperCollins and Simon & Schuster will compensate consumers who purchased eBooks from any of the Agency Five during the period of April 1, 2010, through May 21, 2012. Payments will begin 30 days after the court approval of the settlement becomes final.

Consumers in Connecticut are expected to receive up to $1,264,658 in total compensation. The settling defendants will also pay approximately $7.5 million to the states for fees and costs.

In addition to paying the $69 million consumer compensation, Hachette, HarperCollins and Simon & Schuster have agreed to terminate their existing agency agreements with certain retailers, requiring the publishers to grant retailers – such as Amazon and Barnes & Noble – the freedom to reduce the prices of their eBook titles.

Another case against non-settling publishers – Penguin and MacMillan and Apple, Inc. – remains pending in the Southern District of New York.

Assistant Attorneys General Joseph Nielsen, Gary Becker and Kirsten Rigney, Paralegal Holly MacDonald and Assistant Attorney General Michael Cole, chief of the Antitrust Department are assisting the Attorney General in this matter.

Attorney General Jepsen serves as co-chair of the Antitrust Committee for the National Association of Attorneys General.