New Allegations in E-Books Price-Fixing Lawsuit, Says Hagens Berman
January 20 2012 - 6:12PM
Business Wire
Hagens Berman attorneys representing e-book purchasers in a case
that claims five major publishers conspired with Apple (NASDAQ:
AAPL) to fix the price of e-books today filed an updated complaint
including new information and allegations.
The updated complaint names five of the nation’s top publishers
including HarperCollins Publishers, a subsidiary of News
Corporation (NASDAQ: NWSA); Hachette Book Group; Macmillan
Publishers; Penguin Group Inc., a subsidiary of Pearson PLC (NYSE:
PSO); and Simon & Schuster Inc., a subsidiary of CBS (NYSE:
CBS), as well as Apple (NASDAQ: AAPL), as defendants.
In the class-action lawsuit, consumers claim that the publishers
feared Amazon’s $9.99 pricing model to such a degree that they
conspired with Apple to force Amazon to adopt a new agency model in
which publishers set prices directly, effectively ending Amazon’s
ability to provide consumer-friendly pricing for e-books.
After the publishers unanimously and simultaneously adopted the
new pricing model, the price of e-books shot up 30 percent,
according to the complaint.
“The information we’ve included in this new filing shows the
deep antagonism that publishers had toward Amazon for its
consumer-friendly pricing,” said Hagens Berman managing partner
Steve W. Berman, who is lead counsel in the case. “Since we began
the action last August we’ve uncovered statements from executives
at several publishers that demonstrate they viewed Amazon as a
significant threat to the long-term survival of their
profitability.”
Berman added that the fear and loathing of the competitive
threat by Amazon led the publishers to take strident -- and illegal
-- actions in an attempt to shore up their failing business model.
“We intend to show that the big publishers saw the sea change in
the delivery of books, and agreed to a price-fixing conspiracy as a
last-gasp attempt to maintain profit margins.”
The complaint cited a statement made by David Young, Chairman
and CEO of Hatchett Book Group USA, who told The New Yorker, “If
it’s allowed to take hold in the consumer’s mind that a book is
worth ten bucks, to my mind its game over for this business.”
The complaint also quotes Macmillan CEO John Sargent, who posted
a blog claiming that the market was previously “fundamentally
unbalanced” but that thanks to the agency model, it would now be
“stable and rational.”
According to the updated complaint, the publishers’ fears were
expressed by Arnaud Noury, chairman and CEO of Hatchett Livre SA,
in a meeting on Dec. 3, 2009, with an Amazon executive. In the
meeting, Noury allegedly suggested that if Amazon would agree to a
$2.00 or $3.00 increase in the price of e-books, Hatchett and its
competitors’ fears would be allayed and the “industry” problem
would be solved.
“Noury’s meeting with Amazon is just one piece of a growing body
of evidence that the publishers were coordinating a plan to force
Amazon to increase e-book prices, one way or another,” said
Berman.
The updated complaint also includes new information first
exposed in Walter Isaacson’s biography, Steve Jobs, including a
passage in which Jobs explains that “Amazon screwed it up,” causing
Apple to suggest a transition to the agency model. Jobs also
described Apple’s request that no other retailer be allowed to sell
e-books at a lower price than Apple. This “most favored nation”
clause in Apple’s agreements allowed it to avoid competing on
price, according to the complaint.
“Steve Jobs saw the publishers’ desperation and shrewdly
coordinated a scheme that would benefit Apple and the publishers
alike,” said Berman.
The updated complaint provides new data to demonstrate the rise
in the price of e-books following the adoption of the agency model.
The data shows an average price increase of more than 30 percent,
and 40 percent for new bestsellers. The complaint also demonstrates
that some e-books now cost more than their print counterparts.
The lawsuit seeks damages for the purchasers of e-books, an
injunction against pricing e-books with the agency model, and
forfeiture of the illegal profits received by the defendants as a
result of their anticompetitive conduct, which could total tens of
millions of dollars.
Hagens Berman invites potential plaintiffs to contact its office
at ebooks@hbsslaw.com or by phone at 206-623-7292.
You can learn more about this case by visiting
www.hbsslaw.com/ebooks.
About Hagens Berman
Seattle-based Hagens Berman Sobol Shapiro LLP is one of the top
class-action law firms in the nation, with offices in Boston,
Chicago, Colorado Springs, Los Angeles, Minneapolis, New York,
Phoenix, San Francisco and Washington, D.C. Founded in 1993, we
represent plaintiffs in class actions and multi-state, large-scale
litigation that seek to protect the rights of investors, consumers,
workers and whistleblowers. More information about the firm is
available at www.hbsslaw.com.
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