 Penguin Group agreed to pay approximately $3.1 million to Illinois residents who
were overcharged in the scheme, and Macmillan, which has a smaller share of the
e-book market, agreed to pay about $820,000.
The settlements follow a 2012 lawsuit in which the states alleged that five
publishers -- Hachette, HarperCollins, Macmillan, Penguin Group, and Simon &
Schuster -- colluded with Apple to drive up the price of e-books beginning in
2010, when Apple unveiled its first e-book reader, the iPad.
Prior to Apple entering the e-book market in 2010, most new best-sellers in
this format cost $9.99 -- a price set by the leading e-book retailer, Amazon.
The lawsuit alleged the publishers colluded to increase e-book costs to $12.99
and $14.99 when they struck a deal with Apple to sell their books directly to
readers, using its iBookstore as the vehicle for the sales. Historically,
publishers have sold their books to retailers who in turn have sold them to
readers. The deal with Apple -- a so-called agency model of distribution --
allowed the publishers to control the retail price and to sell the content to
consumers directly. For its part, the lawsuit alleged Apple received a
guaranteed 30 percent commission on all e-books that were sold under the deal.
"The publishers' price-fixing scheme forced customers to pay millions more
than they otherwise would have," Madigan said. "These settlements will restore
the money lost as a result of Penguin and Macmillan's collusion with other
e-book publishers."
Like the three previous publishers to settle, Penguin and Macmillan will
compensate customers who purchased e-books from any of the publishers from April
1, 2010, through May 21, 2012.
Penguin will pay a total of $75 million nationwide. Macmillan will pay $20
million. Payments or credits to consumers are expected to begin 30 days after
the court gives final approval to the settlements.
The attorneys general previously settled with Hachette, HarperCollins, and
Simon & Schuster. From those settlements, Illinois residents are expected to
receive about $2.7 million in refunds. If the Penguin and Macmillan settlements
are approved by the court, Illinois residents' recovery of payments would
increase to a total of $6.7 million.
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As part of the settlements, Penguin and Macmillan also are required
to change the way they price e-books going forward. They must
terminate the agency agreements with certain retailers, such as
Amazon and Barnes & Noble, which prevented the retailers from
reducing the prices of their e-book titles. Until December 2014,
Penguin and Macmillan will be prohibited from making any new
agreements that prevent retailers from offering consumer discounts
or other promotions that encourage the sale of e-books. The proposed
settlement agreements also prohibit Penguin and Macmillan from
further conspiring or sharing competitively sensitive information
with their competitors for five years.
Penguin and Macmillan also agreed to pay $7 million and $3
million, respectively, to the states for the cost of the
investigations and litigation. In addition, the settlements would
resolve a private class action against Penguin and Macmillan that
was brought by e-book purchasers from other states.
The antitrust case against the remaining defendant, Apple Inc.,
is pending in the Southern District of New York.
Bureau Chief Robert Pratt and Assistant Attorney General Chadwick
Brooker have handled these cases for Attorney General Madigan's
Antitrust Bureau.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan]
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