West Virginia Consumers Win in Antitrust Lawsuit Filed Against Apple for Fixing the Prices of Electronic Books
CHARLESTON — West Virginia Attorney General Patrick Morrisey today announced that the U.S. District Court for the Southern District of New York found Apple Inc. liable for violating antitrust laws by conspiring with major U.S. publishers to fix the prices of electronic books.
In an opinion and order filed today, the Court found that Apple played a “central role in facilitating and executing” a conspiracy with five publishing houses publishers — Hachette Book Group Inc., HarperCollins Publishers LLC, Holtzbrinck Publishers LLC (Macmillan), Penguin Group USA Inc., and Simon & Schuster Inc. — to raise e-book prices in the spring of 2010.
The Court said Apple knew the publishers wanted to raise the price of e-books above the $9.99 prevailing price charged by Amazon for many bestsellers and other newly released hardcover books. Apple met with publishers prior to the launch of its iPad tablet and iBookstore in January 2010 with the hope of securing agreements with them to offer electronic versions of books simultaneously with the hardcover releases and promised to charge a higher amount for those titles. Apple agreed to charge between $12.99 and $14.99 for e-books as long as the publishers required all other e-bookstores, including Amazon, to charge the same price.
“This order is a victory for consumers in West Virginia who paid more for e-books bought between 2010 and 2012 because of an illegal agreement between Apple and five of the largest publishers,” Morrisey said. “West Virginia, other states and the federal Department of Justice believed Apple and the publishers broke the law when they entered into agreements to eliminate retail price competition, and the Court agreed. Because of their conspiracy, e-book prices rose dramatically, in some cases by 50 percent, and the free market system that this nation enjoys was not able to work in the way in which it is intended.”
In total, 33 states and territories joined with the U.S. Department of Justice as plaintiffs in the lawsuit that alleged Apple and the publishers violated Section 1 of the Sherman Antitrust Act and various state laws by raising, fixing and stabilizing the retail price for newly released and bestselling trade e-books.
The order, signed by Judge Denise Cote, came after a three-week bench trial, which lasted from June 3-20. The trial did not address the issue of damages, which will be addressed at a future proceeding.
The five publishers settled the states’ claims against them prior to trial, resulting in consumers nationwide receiving more than $165 million in compensation. It is currently unknown how much of that compensation will come to West Virginia consumers, but book buyers who are eligible for settlement money likely will be contacted directly by the settlement administrator, retailers or others.