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Macmillan settles e-book case with DOJ

The US Department of Justice (DOJ) [official website] announced [press release] Friday that a settlement has been reached with Holtzbrinck Publishers LLC, known by the public as Macmillan [corporate website], over allegations that the publishing company conspired with Apple to raise the retail price of e-books. The DOJ's Antitrust Division [official website] reached agreements previously [JURIST reports] with Hachette Book Group Inc., HarperCollins Publishers L.L.C., Penguin Group (USA) Inc. and Simon & Schuster Inc. [corporate websites], making Macmillan is the last of five publishers to reach a settlement. As a result of the agreement, Macmillan will lower its prices on e-books. Though Macmillan CEO John Sargent maintained his assertion that the company had done nothing wrong, he explained in an online letter [tor.com blog] addressed to "Authors, Illustrators and Agents" that Macmillan chose to settle "because the potential penalties became too high to risk even the possibility of an unfavorable outcome." The proposed settlement was filed in the US District Court for the Southern District of New York [official website] and will await approval by a federal judge after a 60-day comment period. The DOJ stated that it will continue to litigate against Apple, Inc. [corporate website] for conspiring with the five publishing companies, with the trial scheduled to begin in June.

The DOJ alleged that Apple, Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster conspired to fix the prices of e-books in response to Amazon's discount pricing strategy. The DOJ brought the suit in April, and the court denied a motion to dismiss [JURIST reports] in May. Commentators had been very mixed in response to the proposed settlement agreement. Some commentators have suggested that the DOJ's lawsuit is merely "superficial" [JURIST op-ed] and that the effect of the agency agreements may actually have been a net-positive to consumers if Amazon was selling e-books as loss leaders in order to drive the sale of Kindles. Other commentators, however, state that commentators against the settlement agreement and the defendants' arguments are based on a premise that competition is wrong [JURIST op-ed].

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