Anti-Trust Update

Several questions come to mind with the announcement that Apple Inc. and five publishers have been sued for anti-trust violations on the pricing of e-books.  The one most people will be asking themselves is “What does this mean for me?”  Apple and two publishers, Macmillan and Penguin, have refused to settle and pledge to go to trial, with the next court date set for June 22.  However, three publishers (Simon and Schuster, Hachette, and HarperCollins) have already settled with the Department of Justice and 16 States Attorney Generals (including Ohio).  Assuming the settlements are approved, the publishers must renegotiate their contracts with Apple, as well as other e-book retailers, following the 60 day comment period and the termination of existing contracts.  This means that nothing will likely change until June at the earliest as far as the pricing of e-books is concerned.  At that time, the new contracts the three publishers who have settled make with retailers such as Amazon could allow for steep discounting any even bundling (Buy One, Get One, for example).  But there will be limits on how inexpensively retailers will be able to sell e-books, because they will not be permitted to set the prices so low that the publisher’s catalog is sold at a loss.  In other words, the new contracts can “prevent e-book retailers from cumulatively selling that Settling Defendant’s e-books at a loss over the period of the contract.” (Full text of the case filed.)  

Another question is how will the settlements and future litigation affect libraries?  As of now, not at all.  The settlements that have already been reached apply only to individual people, not business or libraries.  However, a Seattle Law firm, Hagen Bermans, is still pursuing the possibility of a class action suit that could include business and libraries. But because state action supersedes private class action suits, if all 50 states become involved in anti-trust cases and settlements, which is a possibility, the class action may not be able to go forward.