Apple Inc. and five book publishers face at least two lawsuits in the Northern District of California alleging they conspired to fix the price of eBooks in the U.S. by so drastically changing the pricing system that eBooks now cost more than paper books in some cases. While they may be the first two suits to hit the Northern District of California, the allegations are not new.
The European Union antitrust regulators made unannounced raids on several eBook publishers in March, according to news reports. And the attorneys general in Texas and Connecticut have launched inquiries.
The first suit, by Jeff Friedman of Hagens Berman Sobol Shapiro, of Berkeley, alleges the publishers implemented a price-fixing scheme to coincide with Apple’s January 2010 launch of the iPad .
The change was intended to blunt the market power of Amazon.com’s popular Kindle eBooks reader, released in 2007, states the August 11 class action. The Kindle had offered electronic books for $9.99, cutting below existing prices for hardback and many paperback books.
Second up is an August 19 filing by Jade Butman of Keller Grover in San Francisco. This suit also accused Apple and five publishers of instituting an agency model of pricing to thwart the book price reductions brought on by the Kindle.
Typically, publishers sell their wares wholesale to book stores, which then set the prices charged to retail customers. Because the Kindle set initial prices at $9.99 it was undercutting even the wholesale prices it paid in some instances, the suit alleges.
Under the agency model created by the five publishers, the publishers set the retail prices of eBooks consumers purchase and the publishers pay Amazon, Apple, Barnes & Noble and Sony (all with eReaders) a fixed commission of 30 percent of the retail prices, according to the suit.
The suits alleged Amazon was forced to abandon its discount pricing for the popular Kindle and adhere to the new agency model. The publishers would deny Amazon access to the title, according to the complaint. As a result, the suits allege consumers have been damaged.
The publishers named in the suit include Harpercollins Publishers, Inc., Hachette Book Group, MacMillan Publishers Inc., Penguin Group, Inc. and Simon & Schuster, Inc.
Because the Hagens Berman filed first, the case was assigned to Judge Edward Chen and already as a request to join up the second case by Butman in the same proceedings.
The suits claim Sherman and Clayton Antitrust Act violations as well as California antitrust claims of restraint of trade and consumer protection law violations.
The Hagens Berman suit was violed on behalf of Anthony Petru, an Oakland resident and Marcus Mathis, of Natchez, Mississippi, who each bought books priced abortion the $9.99 Amazon price after adoption of the agency model. And the Keller Grover suit was on behalf of Andreas Albeck of Brooklyn, New York.