US Accuses Apple Inc of E-book Control Conspiracy

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In a case that would ultimately change the fast-growing world of E-books, the Department of Justice is accusing Apple Inc. of conspiring to raise prices.

The civil anti-trust lawsuit states that CEOs of the publishing companies met privately with Apple in an upscale restaurant in Manhattan to come up with a plan to counteract the considerable discounts Amazon.com has been applying to books. They produced an arrangement that raised the prices of best-selling books up to $14.99 and then banded together to force these changes on Amazon.

Three of the publishers (Hachette Book Group, CBSA, Simon & Schuster Inc., NWSA and HarperCollins Publishers LLC) have already settled with the Justice Department agreeing to let retailers continue discounting. The remaining two publishers (Macmillan and Pearson PLC’s Penguin Group) have not settled and are ready to go head to head with the government in court. Their stance, after refusing the government’s offer, is trying to keep Amazon from monopolizing the industry and to prevent a negative and long-term impact on consumers.

In 2009, before new pricing set in, Amazon held around 90% of the e-book market. That has now slipped to around 60% with Barnes & Noble holding between 25% and 30%, and Apple has much of the remainder.

Image: Apple, Inc