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The publishers say the new restrictions hurt publishers, not Apple

Book publishers aren't happy with the U.S. Department of Justice's (DOJ) proposed solutions for Apple as a result of the eBooks ruling.

The five book publishers, which took part in an agency price model with Apple and were targeted in the DOJ investigation as well, said that the new solutions punish the publishers more than they do Apple. 

Furthermore, they said that the restrictions on Apple go against the previous settlements between the publishers and the DOJ, where the publishers have already paid $166 million to benefit consumers. 

"Despite achieving their stated goal of returning price competition, plaintiffs now seek to improperly impose additional, unwarranted restrictions on the settling defendants, thereby depriving each publisher of the benefit of its bargain with plaintiffs," wrote the publishers.

The publishers -- including 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) -- filed a motion on Wednesday in U.S. district court in Manhattan. The motion said that the proposals don't place any limitations on Apple's pricing behavior, but instead punishes publishers by preventing them from having agency agreements with Apple. 


This all started in April 2012, when the U.S. Department of Justice (DOJ) sued Apple and the five book publishers for using an agency pricing model in their agreements. This means 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.

Last month, Apple -- which was the only company to go to trial regarding eBooks while the book publishers had already settled with the DOJ -- was found guilty of conspiring to raise eBook prices. U.S. District Judge Denise Cote handed down the ruling, saying that consumers and competitors were negatively affected by the arrangement Apple had with the book publishers. 

As a result, the DOJ and 33 U.S. states and territories devised a list of solutions to punish Apple. These included that Apple be banned from entering anti-competitive e-book distribution contracts for five years; end its business models with the five publishers it conspired with; use an outside monitor to make sure that its antitrust policies are effective, and allow retailers like Amazon and Barnes & Noble to provide links to their options for two years.

A hearing to discuss remedies and hold a trial on damages will take place on August 9.

Source: Reuters



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Sigh...
By amanojaku on 8/8/2013 1:20:10 PM , Rating: 4
quote:
As a result, the DOJ and 33 U.S. states and territories devised a list of solutions to punish Apple. These included that Apple be banned from entering anti-competitive e-book distribution contracts for five years; end its business models with the five publishers it conspired with; use an outside monitor to make sure that its antitrust policies are effective, and allow retailers like Amazon and Barnes & Noble to provide links to their options for two years.
I know this article isn't meant to retell the saga, but what's written here is misleading, as seen in DigitalFreak's post.

Apple is NOT being barred from anti-competitive contracts for five years. Anti-competitive practices (in this case, price fixing) are already illegal. Apple is being forced to lower its prices to that of every other competitor for five years. For example, if Amazon sells a book for $10, Apple cannot sell it for $15. After five years, Apple could sell the book for $15 again, but it cannot force publishers to require Amazon to raise the price from $10 to $15.

Personally, I think the DOJ should let Apple sell books at whatever price it wants. If consumers are stupid enough to buy books at higher prices that's their business. Smart people will just buy from Amazon, provided there is an Amazon e-reader for iOS (there probably is, but I don't care enough to check).

Here is a summary of why Apple is being punished, and what the DOJ wants, from the DOJ's website:
quote:
The court found that Apple’s illegal conduct deprived consumers of the benefits of e-book price competition and forced them to pay substantially higher prices (price fixing is always illegal)

and to refrain for five years from entering new e-book distribution contracts which would restrain Apple from competing on price (Apple cannot set its own prices in the iTunes store, or whatever it is Apple sells books from, for five years)

Under the department’s proposed remedy, Apple will be prohibited from again serving as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms. (price fixing and collusion are always illegal)

Apple will also be prohibited from entering into agreements with suppliers of e-books, music, movies, television shows or other content that are likely to increase the prices at which Apple’s competitor retailers may sell that content. (Apple can sell a $10 book for $15 if it wants to, after five years, but it can't force publishers to raise Amazon or Barnes & Nobles's price to $15. )
http://www.justice.gov/opa/pr/2013/August/13-at-87...




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