Five book publishers and computer manufacturer Apple have been sued for allegedly colluding to drive up the price of e-books, lawyers for the plaintiffs said. The class-action suit, filed in the US District Court here, claims HarperCollins, Hachette, Macmillan, Penguin and Simon & Schuster had worked with Apple to break Internet retailer Amazon.com's discount pricing strategy and help Apple's iPad compete with the Kindle marketed by Amazon.
According to the suit, the publishers believed that Amazon's popular Kindle e-reader device and the company's discounted pricing for e-books would increase the adoption of e-books, and feared Amazon's discounted pricing structure would permanently set consumer expectations for lower prices, even for other e-reader devices.
"Fortunately for the publishers, they had a co-conspirator as terrified as they were over Amazon's popularity and pricing structure, and that was Apple," said Steve Berman, an attorney representing consumers. "We intend to prove that Apple needed a way to neutralise Amazon's Kindle before its popularity could challenge the upcoming introduction of the iPad, a device Apple intended to compete as an e-reader," Berman added.
The complaint claims that the five publishing houses forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices and extinguished competition so that retailers such as Amazon could no longer offer lower prices for e-books. If Amazon attempted to sell e-books below the publisher-set levels, the publishers would simply deny Amazon access to the title, the complaint claims.
The defendant publishers control 85 percent of the most popular fiction and non-fiction titles. According to the lawsuit, Apple and publishers were concerned that Amazon's $9.99 uniform pricing for best-sellers would create market pressures for other e-booksellers - including Apple - to do the same, cutting into profitability. The named plaintiffs included Anthony Petru, a resident of Oakland, California, and Marcus Mathis, a resident of Natchez, Mississippi. The law firm Hagens Berman, which posted the complaint on its website, announced the filing of the suit on August 9.