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August 30, 2012

Miller, Attorneys General Reach $69 Million Agreement with Three Major Publishers over E-book Price-fixing Allegations

Iowa consumers to receive approximately $614,000 through settlement

(DES MOINES, Iowa)  Attorney General Tom Miller, along with 54 attorneys general in other states, districts and U.S. territories, announced today that they have reached an antitrust settlement with three of the nation’s largest book publishers.

Hachette Book Group, Inc., HarperCollins Publishers L.L.C. and Simon & Schuster Inc. have agreed to pay a total of more than $69 million to consumers nationwide to resolve antitrust claims of an alleged unlawful conspiracy to fix the prices of electronic books, or 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 today in 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 eBook prices for all consumers” and “agreed to eliminate eBook retail price competition between eBook outlets, such that retail prices to consumers would be the same regardless of the outlet patronized by the consumer.”

“We alleged that some of the largest publishers in the market fixed prices on e-books,” Miller said.  “This case sends a message that undermining competition unfairly takes money away from consumers, it threatens our free market, and it’s something we just won’t tolerate.”

The lawsuit and today’s settlement stem from a two-year antitrust investigation conducted jointly by the U.S. Department of Justice’s Antitrust Division and attorneys general in Connecticut and Texas.  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 attorneys general alleged that the publishers prevented retail price competition resulting in consumers paying tens of millions of dollars more for their e-books.

“This settlement provides restitution to those who were harmed by this price-fixing scheme, and it also restores competition in the e-book market for the benefit of consumers,” Miller said.

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.  The companies will begin mailing payments 30 days after the settlement’s court approval becomes final.

“This case involved great bipartisan cooperation the state level, and great cooperation with our federal partners,” Miller said.  “Ultimately, 54 states and jurisdictions all worked together on behalf of consumers across the country, including consumers here in Iowa.”

Iowa consumers are expected to receive approximately $614,000 in total compensation.  The settling defendants will also pay approximately $7.5 million to the states, including $27,000 to Iowa, 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.

Another case against non-settling publishers – the Penguin Group, MacMillan and Apple – remains pending in the Southern District of New York.


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