by Marina Evans
Last week, the United States Department of Justice condemned the substantial amount of criticism levied upon its controversial price-fixing settlement with Apple and the “big five” publishers (Hachette, HarperCollins, Macmillian, Penguin and Simon & Schuster). Some 800 public comments were filed on the settlement, many of them accusing the DoJ of upholding Amazon’s iron grip on the market while punishing Apple and the publishers for what appear to be survival tactics in the face of the Amazon giant.
The settlement, from Apple’s point of view, restricts publishing business models to the point of forcing all publishers to sell their books in the same way. The DoJ dismisses this claim, stating that “Nothing in the proposed Final Judgment would force Apple or B&N to exercise discounting authority—they are free to carry out their own businesses exactly as before. What they may not do is continue to rely on a conspiracy to restrain their competitors.” The settlement does require that Apple and the big five publishers terminate any existing “Apple Agency Agreements” within seven days’ of its approval. The publishers may then sign new contracts, but are not allowed to use clauses restricting retailers’ rights to discount for a period of two years.
In the next few months the proposed settlement will go before Judge Denise Cote, who will decide whether to approve, amend, or dismiss it, depending on the results of the fact-finding investigations currently being conducted by the DoJ. Since the settlement’s announcement back in April, this case has gained international attention. We anticipate that Judge Cote’s decision will set the tone for the digital publishing industry for years to come.
Read the full contents of the DoJ’s April settlement here.