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Publishers object to US remedy in Apple case in NY

Wednesday - 8/7/2013, 10:00pm  ET

NEW YORK (AP) -- Publishers who have settled an electronic book pricing dispute with the federal government objected Wednesday to penalties the government wants to impose on Apple Inc., saying it will hurt publishers rather than the personal electronics giant.

A judge ruled in an antitrust case last month that Cupertino, Calif.-based Apple had conspired with publishers to drive up the price of e-books in 2010, spoiling the $9.99 price Amazon.com had established. The trial revealed e-book prices rose after Apple signed so-called agency agreements with publishers that took effect in 2010. In such agreements, publishers set prices for each title, rather than retailers.

In papers submitted to a federal court judge Wednesday, five publishers said the government's plans to ban Apple from engaging in agency agreements for five years would not restrict Apple's pricing behavior.

"Rather, under the guise of punishing Apple, they effectively punish the settling defendants by prohibiting agreements with Apple using an agency model," lawyers for the publishers said.

As recommended by the government, a court order would require Apple to terminate any agency agreement with publishers.

The publishers said the proposed remedy conflicts with consent decrees the publishers agreed to when they settled their cases with the government. Those deals permit the publishers to enter agency deals with e-book retailers with some agreed-to limitations.

The publishers said the Justice Department "induced publishers to enter these agreements on the condition that publishers could continue to use the agency model." As a result, the court papers said, the publishers entered agency agreements with Apple and other e-book retailers under the agency model. Breaking those deals would be costly and disrupt business, they said.

The court papers were submitted on behalf of HarperCollins Publishers LLC, Hachette Book Group Inc., Simon & Schuster Inc., Holtzbrinck Publishers LLC and Penguin Random House LLC.

Justice Department spokeswoman Gina Talamona said the proposed settlement with Apple would prohibit the company from entering deals that limit retail price competition during a defined period.

"The proposed relief does not modify the terms of the settlements we reached with the publisher defendants," she said.


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