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E-Book Publishers Seek to Settle State Antitrust Claims

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E-Books Case Judge Told Two Publishers Settling With States
A digital book is displayed on an Apple Inc. iPad for a photograph in New York. Photographer: Scott Eells/Bloomberg

April 18 (Bloomberg) -- Three publishers that settled U.S. Justice Department claims they conspired with Apple Inc. to fix the prices of electronic books are working to resolve related state claims, their lawyers told a judge in New York.

Attorneys for Lagardere SCA’s Hachette Book Group and News Corp.’s HarperCollins told U.S. District Judge Denise Cote that they have signed a memorandum of understanding with 15 states and Puerto Rico to settle claims they conspired to fix prices for digital books. They hope to have a settlement with all 50 states completed by June 11, Shepard Goldfein, a HarperCollins lawyer, told Cote in a hearing today.

CBS Corp.’s Simon & Schuster unit is also negotiating with the states and hopes to reach an agreement, said Helene Jaffe, a lawyer for the publisher.

The states, led by Connecticut and Texas, claim damages on behalf of people who were forced to pay too much for e-books because of the conspiracy, according to their suit, filed in federal court in Austin, Texas, April 11, the same day the U.S. sued Apple and five publishers for allegedly fixing prices in an attempt to undermine Amazon.com Inc.’s dominance of the e-book market.

Before the pricing agreements the Justice Department claimed are illegal, Seattle-based Amazon dominated the digital books market by offering titles at $9.99 each. Under the pricing agreements, the publishers set prices for best-selling books at $12.99 and $14.99, giving Cupertino, California-based Apple a 30 percent cut.

E-Book Settlement

Hachette, HarperCollins and Simon & Schuster settled with the Justice Department, agreeing to cancel contracts with Amazon, Google Inc. and other electronic booksellers that allowed publishers to set their own prices for the books. Apple, Pearson Plc’s Penguin unit and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, continue to fight the lawsuit.

Further settlement talks involving defendants in the federal case probably wouldn’t be productive, said Joseph Wayland, a Justice Department lawyer. Cote said she will consider public comments on the proposed settlement with HarperCollins, Hachette and Simon & Schuster to determine whether it’s in the public interest.

U.S. antitrust officials have stepped up enforcement against anticompetitive price-fixing agreements in industries including health care and auto parts. Regulators have also increased scrutiny of Apple’s digital publishing, mobile computing and music retail businesses to make sure the iPad maker hasn’t thwarted competition on its way to becoming the world’s most valuable company.

Consumer Cost

Apple’s digital book-pricing practice may have cost consumers more than $100 million, Connecticut Attorney General George Jepsen said at a Washington news conference after the state suit was filed. A settlement with all the states would resolve most of the claims in a private class action, or group suit, filed on behalf of consumers, Michael Cole, the chief of Connecticut’s antitrust department, told Cote today.

The case is U.S. v. Apple, 12-cv-02826, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net

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

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