Penguin Settles With DOJ On eBook Pricing

Associated Press,

The Justice Department announced Tuesday that it has reached a settlement with Penguin Group (USA) Inc. in its lawsuit accusing the nation's largest book publishers of colluding with Apple Inc. to raise e-book prices on customers.

The settlement, if approved by a federal judge, leaves Apple Inc. and Holtzbrinck Publishers, which does business as Macmillan, as the only defendants in the federal government's lawsuit accusing Apple, the multimedia and computer giant, of conspiring with several publishers in 2009 to force e-book prices several dollars above the $9.99 charged by Amazon.com Inc. on its Kindle device.

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The Justice Department, which sued in April, settled with Hachette Book Group Inc., HarperCollins Publishers and Simon & Schuster Inc. earlier this year. The trial is scheduled to begin in June.

"The proposed settlement with Penguin will be an important step toward undoing the harm caused by the publishers' anti-competitive conduct and restoring retail price competition so consumers can pay lower prices for Penguin's e-books," said Jamillia Ferris, chief of staff and counsel at the Justice Department's antitrust division.

Apple has said the government's accusation that it conspired with major book publishers to raise the price of e-books is untrue.

The proposed settlement was filed in federal court in New York.

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The settlement had been expected by some industry observers as a means to simplify Penguin's impending merger with Random House, which is not a defendant in the case. That deal would create the world's largest publisher of consumer books.

Under the settlement, Penguin "will be prohibited for two years from entering into new agreements that constrain retailers' ability to offer discounts or other promotions to consumers to encourage the sale of the Penguin's e-books," and must submit to "a strong antitrust compliance program" that includes telling federal officials about any joint e-book ventures or any communications with other publishers, Justice Department officials said.

The Justice Department's lawsuit stems from agreements reached between major publishers and Apple in 2010 that allowed publishers to set their own prices for e-books, an effort to counter Amazon's deep discounts of bestsellers. The department and 15 states said Apple and the publishers cost consumers more than $100 million in the last two years by adding $2 or $3, and sometimes as much as $5, to the price of each e-book.

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