Settlement leaves computer giant Apple and Holtzbrinck Publishers fighting the federal government’s civil antitrust case

The U.S. Department of Justice (DOJ) reached a settlement Dec. 18 with Penguin Group (USA) in its civil antitrust lawsuit accusing the nation’s largest publishers of colluding with Apple to raise e-book prices. 

If approved by a federal judge, the settlement leaves computer giant Apple and Holtzbrinck Publishers (Macmillan) as the only defendants standing against the federal government’s charges that Apple conspired with several publishers in 2009 to force e-book prices several dollars above the $9.99 charged by Amazon on its Kindle device, Associated Press (AP) reported.

The Justice Department, which filed the suit in April, settled with Hachette Book Group, HarperCollins Publishers and Simon & Schuster earlier this year. The approval of a settlement between the DOJ and the three publishers could have a negative impact on Christian retailers because it could result in diminished competition in the e-book retail sector, contributing to the closing of many more retail outlets, according to industry observers.

The trial against Apple and Holtzbrinck Publishers is scheduled to begin in June.

“The proposed settlement with Penguin will be an important step toward undoing the harm caused by the publishers’ anticompetitive conduct and restoring price competition so consumers can pay lower prices for Penguin’s e-books,” said Jamillia Ferris, chief of staff and counsel at the DOJ’s antitrust division, AP reported.

The settlement had been expected by some industry observers in light of Penguin’s impending merger with Random House, which is not a defendant in the case. The merger will create the world’s largest publisher of consumer books.

Under the settlement, Penguin “will be prohibited for two years from entering into new agreements that constrain retailers’ ability to offer discounts or other promotions to consumers to encourage the sale of the Penguin’s e-books,” and must submit to “a strong antitrust compliance program” that includes telling federal officials about any joint e-book ventures or any communications with other publishers, Justice Department officials said.

The DOJ’s lawsuit stems from agreements reached between major publishers and Apple in 2010 that allowed publishers to set their own prices for e-books, an effort to counter Amazon’s deep discounts of best-sellers.