Three Major U.S. Publishers to Pay $69 Million Over Allegations of Price Fixing E-Books
Massachusetts Consumers Expected to Receive More Than $2 Million in Total Compensation
BOSTON – Three of the largest book publishers in the country have agreed to pay more than $69 million to consumers who were overcharged for electronic books (e-books), resolving allegations that they conspired to fix their prices, Attorney General Martha Coakley announced today. Massachusetts consumers are expected to receive more than $2 million in restitution from the settlement agreement that requires court approval.
Under the agreement – reached with the AG’s Office and 54 attorneys general in other states, districts and U.S. territories, and filed today in U.S. District Court for the Southern District of New York – Hachette Book Group, Inc., HarperCollins Publishers, LLC, and Simon & Schuster, Inc. will compensate consumers who purchased e-books published by them, or by alleged co-conspirators Macmillan and Penguin, between April 1, 2010 and May 21, 2012. Payments will begin 30 days after the court approval of the settlement becomes final. Publishers Macmillan and Penguin have not settled.
“We found compelling evidence that these companies conspired to fix prices and overcharge consumers for some of the most popular e-book titles,” AG Coakley said. “Today’s settlement paves the way for restitution for consumers harmed by the scheme and restores competition in the e-book market by promoting competition among retailers.”
Consumers in Massachusetts are expected to receive up to $2.15 million in total compensation from the settlement. The settling defendants – Hachette, HarperCollins and Simon & Schuster – will also pay approximately $7.5 million to the states for fees and costs, and have agreed to change the way they price e-books going forward.
The proposed settlement has been reached in conjunction with a civil antitrust lawsuit filed today by AG Coakley and other attorneys general, alleging that they “conspired and agreed to increase retail e-book prices for all consumers” and “agreed to eliminate e-book retail price competition between e-book outlets, such that retail prices to consumers would be the same regardless of the outlet patronized by the consumer.”
The complaint alleges that as a result of the conspiracy, consumers nationwide collectively paid millions of dollars in overcharges on e-books.
In addition to paying the $69 million in consumer compensation, Hachette, HarperCollins and Simon & Schuster have agreed to terminate their existing agency contracts with certain retailers, an agreement that requires the publishers to grant retailers – such as Amazon and Barnes & Noble – the freedom to reduce the prices of their e-book titles.
For two years, the publishers will also be prohibited from making any new agreements that constrain retailers’ ability to offer consumer discounts or other promotions which encourage the sale of e-books. The proposed settlement agreement also precludes these three publishers from agreeing to any kind of Most Favored Nation clause for five years that could undermine the effectiveness of the settlement agreement.
In May 2012, AG Coakley joined 32 other attorneys general in filing a complaint against Apple Inc. and non-settling publishers Penguin and Macmillan, alleging similar illegal conduct in which the publishers set the prices for many bestsellers at $12.99 and $14.99. That case continues and trial is set for early June 2013.
This case is being handled by Michael Franck, Assistant Attorney General, and Helen Hood, paralegal, in Attorney General Martha Coakley’s Antitrust Division, as well as William Matlack, Chief of the Antitrust Division.