DOJ Threatens to Sue Apple, Publishers for Violating Federal Antitrust Laws

How much did you pay for your most recent e-book purchase? According to the Justice Department, you may have paid too much. News outlets have recently reported that the Justice Department has threatened to sue Apple and prominent book publishers such as Simon & Schuster, Hachette Book Group, Penguin Group, Macmillan, and HarperCollins Publishers for violating federal antitrust laws by price-fixing the cost of their e-books.

The Justice Department’s allegations are based on events occurring in 2010, when the Justice Department alleges that Apple and the above-named publishers engaged in price-fixing to force Amazon to increase the cost of its e-books. At the time, Amazon was selling many of its e-books for just $9.99.

Reportedly, Amazon and Apple have also developed a practice of offering publishers “most favored nation” clauses. These clauses prohibit publishers from offering their e-books at a cheaper price to other e-book competitors. According to CNN, the agreements “aren’t straight out illegal under antitrust laws – but they’re also not always legal.” According to the Wall Street Journal, the Justice Department has recently looked more closely at these clauses because of their potential to limit market competition illegally.

Publishers have argued that their actions have had the positive effect of making the e-book market more competitive. They argue that their actions prevented Amazon from dominating the e-book industry.

Apple, the publishers, and the Justice Department are reportedly in settlement negotiations to resolve the matter.

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