The holdout publisher in the Justice Department’s e-books price fixing case agreed to a settlement with the government on Feb. 8, setting the stage for a showdown between Apple Inc. and federal prosecutors later this year. Holtzbrinck Publishers LLC, which does business as Macmillan, will immediately lift its restrictions on discounting and other promotions by e-book retailers and will be prohibited until December 2014 from entering into new agreements with similar restrictions. It will also be subject to an antitrust compliance program.
The Justice Department sued Macmillan, Hachette Book Group Inc., HarperCollins Publishers LLC, Penguin Group (USA) Inc. and Simon & Schuster Inc. along with Apple in Manhattan federal court in April, alleging that they conspired to raise e-book prices in violation of the Sherman Act.
Three of the publishers—Hachette, HarperCollins and Simon & Schuster—immediately agreed to a settlement, which was approved by Southern District Judge Denise Cote (See Profile) in September over Apple’s objections. Penguin settled in December.
The Justice Department alleged that the companies "worked together to raise retail e-book prices and eliminate price competition, substantially increasing prices paid by consumers." Before the alleged conspiracy, e-books generally sold for $9.99 but rose to $12.99 or $14.99 as a result of the illegal activity, according to the government.
Macmillan’s settlement leaves Apple as the only remaining defendant. The trial against Apple is scheduled to begin in June 2013. Macmillan was represented by Sidley Austin. Apple is represented by O’Melveny & Myers and Gibson, Dunn & Crutcher. All five publishers and Apple still face a consumer class action.