The CNMI Attorney General's Office, along with 54 attorney general offices in other states, districts and U.S. territories, recently reached an antitrust settlement with three of the largest book publishers in the United States.
Hachette Book Group (USA), HarperCollins Publishers L.L.C. and Simon & Schuster Inc. have agreed to pay a total of more than $69 million to consumers to resolve antitrust claims of an alleged unlawful conspiracy to fix the prices of electronic books (e-books). They have also agreed to change the way they price e-books going forward.
The settlement occurs in conjunction with a civil antitrust lawsuit filed in the U.S. District Court for the Southern District of New York against Hachette, HarperCollins, and Simon & Schuster, which alleges that the three settling publishers and others, including non-settling publishers Macmillan and Penguin (collectively, the “Agency Five” publishers), “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 lawsuit and settlement stem from a two-year antitrust investigation conducted jointly by the Connecticut and Texas Attorneys General and U.S. Department of Justice's Antitrust Division. That investigation developed evidence that the Agency Five conspired to end e-book retailers’ freedom to compete on price by taking control of pricing from e-book retailers and substantially increasing the prices that consumers paid for E-books. The department said that the publishers prevented retail price competition resulting in consumers paying millions of dollars more for their e-books.
“Our legal action sends a strong message that competitors cannot get away with price-fixing,” said assistant attorney general Charles Brasington. “Colluding to fix prices raises costs for customers, who, in this case, have paid millions of dollars more for some of the most popular e-book titles. T[his] settlement with three of those publishers paves the way for restitution for those consumers harmed by the scheme. In addition to the money consumers will receive, this settlement will restore competition in the e-book market by promoting e-book competition among retailers. Through our ongoing litigation against the remaining defendants, we hope to provide additional restitution to those consumers harmed.”
Under the proposed settlement agreement, which the court must approve, Hachette, HarperCollins and Simon & Schuster will compensate consumers who purchased E-books from any of the Agency Five during the period of April 1, 2010 through May 21, 2012. Payments will begin 30 days after the court approval of the settlement becomes final. Consumers in the CNMI are expected to receive up to $4,112 in total compensation. The settling defendants will also pay approximately $7.5 million to the states for fees and costs.
In addition to paying the $69 million consumer compensation, Hachette, HarperCollins and Simon & Schuster have agreed to terminate their existing agency agreements with certain retailers, requiring 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 they will be prohibited from making any new agreements that constrain retailers' ability to offer consumer discounts or other promotions that encourage the sale of e-books.
The proposed settlement agreement, also for five years, precludes these three publishers from further conspiring or sharing competitively sensitive information with their competitors. Also for five years, Hachette, HarperCollins and Simon & Schuster will be forbidden from agreeing to any kind of Most Favored Nation clause that could undermine the effectiveness of the settlement agreement.
Trial for the other, non-settling conspirators is set for early June 2013. (OAG)
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