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  (Source: usatoday.net)
Five book publishers were accused of partaking in an agency sales model with Apple

A judge from the Manhattan federal court has finally set a date for the bench trial involving Apple and two publishers who were accused of anticompetitive practices involving e-books.

Back in April of this year, the U.S. Department of Justice (DOJ) sued Apple and five book publishers over anticompetitive practices concerning e-book sales. The book publishers were Hachette Livre (Lagardère Publishing France), Harper Collins (News Corp., U.S.A.), Simon & Schuster (CBS Corp., U.S.A.), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany).

The book publishers were accused of partaking in an agency sales model with Apple, which meant that publishers were allowed to set the price of a book and Apple would take a 30 percent cut. In addition, the publishers could not let rivals sell the same book at a lower price.

Traditionally, publishers sell physical books to retailers for about half of the cover price, which is considered a wholesale model. Retailers then had the ability to sell those books to customers for a lower price if they wanted to.

But when e-books came along, this model was challenged. Amazon started selling best sellers for as low as $9.99 to encourage its Kindle e-reader sales. Publishers were not happy.
Apple then came along with iBooks, and publishers began to worry that it would take over the book industry the way Apple's iTunes took over the music industry, where customers would choose to purchase cheap, digital books instead of physical books.

However, Apple made everything better when it struck a deal with publishers to implement the agency model in 2010. This helped Apple at the time of its iPad and iBooks launch. But its deal with publishers made it seem like an attempt to thwart Amazon's dominance.

Recently, Harper Collins, Simon & Schuster and Hachette Livre decided to settle the case with the U.S. DOJ. However, Apple, Penguin and Macmillan have decided to fight the antitrust case.

The bench trial in the Apple e-book case will start June 3, 2012.




Source: Reuters



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RE: Not quite...
By Varun on 6/28/2012 11:12:47 AM , Rating: 2
Yes not the agency model at all. More like the MFN clause (which is normally used on wholesale prices to make sure you don't get charged more wholesale that other customers, and was twisted by Apple to ensure that there is no price competition) and the fact that all of the publishers got together in a restaurant to make this deal, which is clearly collusion.


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