Posted: Apr 11, 2012 1:36 PM by Greg Boyce
Updated: Apr 11, 2012 1:37 PM
Colorado will join in a multi-state lawsuit over price fixing claims against publishers including Penguin Group, Simon & Schuster and Apple.
There is suspicion those companies engaged in price fixing and other anti-competitive practices in the electronic book market.
The antitrust lawsuit, filed in the U.S. District Court for the Western District of Texas, stems from a two-year investigation, led by the Texas Office of the Attorney General and coordinated with the offices of the Connecticut Attorney General and the U.S. Justice Department, into allegations that the defendants conspired to raise e-book prices. For years, retailers sold e-books through a traditional wholesale distribution model, under which retailers - not publishers - set e-books' sales prices. However, the investigation revealed that the publishers conspired with Apple and other publishers to artificially raise prices by imposing a distribution model in which the publishers set the prices for bestsellers at $12.99 and $14.99.
According to the Texas Attorney General, when Apple prepared to enter the e-book market, the publishers and Apple agreed to adopt an agency distribution model as a mechanism to allow them to fix prices. To enforce their price-fixing scheme, the publishers and Apple relied on contract terms that forced all e-book outlets to sell their products at the same price. Because the publishers agreed to use the same prices, retail price competition was eliminated. According to the lawsuit, the coordinated agreement to fix prices resulted in e-book customers paying more than $100 million in overcharges.
The announcement that Colorado will join the suit was made by Colorado Attorney General John Suthers.