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Apple Accused in Suit of E-Book Price Fixing With Publishers

A customer tries out an Apple Inc. iPad in Frankfurt. Photographer: Ralph Orlowski/Bloomberg
A customer tries out an Apple Inc. iPad in Frankfurt. Photographer: Ralph Orlowski/Bloomberg

Aug. 10 (Bloomberg) -- Apple Inc., in connection with last year’s introduction of the iPad, colluded with News Corp.’s HarperCollins Publishers unit and four other publishers to fix prices of electronic books, according to a lawsuit.

Apple, threatened by Amazon.com Inc.’s Kindle e-book reader and its potential to distribute other digital media, agreed with the publishers on or before January 2010 to announce a so-called agency model to “force the e-book sales model to be entirely restructured,” according to the complaint filed yesterday in federal court in Oakland, California.

The traditional “brick-and-mortar” publishers agreed to the price-fixing because they were threatened by Amazon’s “pro-consumer” e-book titles priced at $9.99, according to the suit.

“Fortunately for the publishers, they had a co-conspirator as terrified as they were over Amazon’s popularity and pricing structure, and that was Apple,” Steve Berman, an attorney representing consumers in the case, said in an e-mailed statement.

“We intend to prove that Apple needed a way to neutralize Amazon’s Kindle before its popularity could challenge the upcoming introduction of the iPad, a device Apple intended to compete as an e-reader,” Berman said in the statement. Berman seeks to represent all e-book consumers in the complaint.

‘Restrained Trade’

The publishers and Cupertino, California-based Apple thwarted the discounting of e-books and “restrained trade by coordinating their pricing to directly set retail prices higher than had existed in the previously competitive market,” according to the complaint.

A representative of Apple didn’t immediately return phone and e-mail messages seeking comment after regular business hours yesterday. Tina Andreadis, a HarperCollins spokeswoman, also didn’t immediately return a call seeking comment after regular business hours.

The other publishers named as defendants in the suit are Hachette Livre SA’s Hachette Book Group unit, U.K.-based MacMillan Publishers Ltd., Pearson PLC’s Penguin Group and CBS Corp.’s Simon & Schuster.

The case is Petru v. Apple Inc., 11-03892, U.S. District Court, Northern District of California (Oakland).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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