For Immediate Release - May 22, 2013

Penguin to Pay $75 Million to Consumers Over Allegations of E-Book Price Fixing

Massachusetts Consumers to Receive More Than $2 Million in Restitution

BOSTON – Penguin Group (USA) Inc. has agreed to pay $75 million to consumers nationwide to settle allegations of price-fixing and collusion in the electronic book (e-book) market, Attorney General Martha Coakley announced today. Massachusetts consumers are expected to receive more than $2 million in restitution from the settlement agreement which requires court approval.

This is the fifth settlement with a book publisher over allegations of price-fixing and collusion since the multi-state lawsuit was filed last year. A pending case against Apple is scheduled for trial in June. Consumers nationwide are expected to receive more than $164 million in total so far from this action. 

“Price collusion among competitors is unacceptable,” AG Coakley said. “This settlement will reimburse consumers harmed in this e-book scheme and bring an end to the unlawful practices that caused these overcharges.”

The agreement with Penguin must be approved by the U.S. District Court for the Southern District of New York. When finalized, the settlement will grant e-book outlets greater freedom to reduce the prices of their e-book titles. Consumers nationwide, including those represented by 33 attorneys general and private counsel in a related class action suit, will receive a total of $75 million in compensation. Penguin will also pay $7 million to the states involved for fees and costs.

As part of a multistate antitrust lawsuit against Penguin, the AG’s Office filed a complaint in May 2012 alleging that Penguin colluded with other major publishers, along with Apple Inc., to manipulate prices in the e-book market and conspired to artificially raise prices by imposing a distribution model in which the publishers set the prices for bestsellers at $12.99 and $14.99.

In August, the AG’s Office settled with three other publishers: Hachette Book Group Inc., HarperCollins Publishers L.L.C., and Simon & Schuster Inc. for similar price-fixing allegations. In April, Macmillan agreed to pay $20 million to consumers nationwide plus costs and fees to settle the same allegations against them. Including today’s action, consumers nationwide will receive a total of $164 million in compensation as a result of the settlements. Of that amount, Massachusetts consumers are expected to receive more than $5 million in restitution.

The Attorney General’s antitrust action against Apple Inc. remains pending with trial scheduled in June 2013.

This matter is being handled by Assistant Attorney General Michael Franck and Division Chief William Matlack, both of Attorney General Martha Coakley’s Antitrust Division.

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