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Connecticut Sues Apple, Publishers for eBook Price Fixing

Some experts say the case against Apple backed by 16 states isn’t strong enough.

Apple and several book publishers are allegedly working together to drive up the price of eBooks resulting in $100 million in overcharges, according to a complaint lodged by 16 states, including Connecticut.

A two-year investigation by the suing states found that Macmillan, Penguin and Simon & Schuster allegedly conspired with other publishers and Apple to artificially raise prices.  

An article on CNET quoted various antitrust experts about thoughts on the case. One said the government “"has a far better case against the publishers than Apple.” Another believes the case against the publishers is also weak. 

When Apple began to enter the eBook market, the states say “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 eBook outlets to sell their products at the same price. Because the publishers agreed to use the same prices, retail price competition was eliminated.”

In a statement, Connecticut Attorney General George Jepsen said, “Publishers deserve to make money, but consumers deserve the price benefits of competition in an open and unrestricted marketplace. Those interests clearly collided in this case and we are going to work to ensure the eBook market is open once again to fair competition.”

In a letter sent by MacMillian CEO John Sargent, the executive defended his company.

"Macmillan did not act illegally. Macmillan did not collude," he wrote.

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