Apple faces suit for price-fixing

The U.S. Department of Justice is bringing up a lawsuit against Apple and several publishing companies over a price-fixing scheme for e-books on Wednesday.  The suit is based from Apple allegedly colluding with five publishers of e-books to raise prices once the iPad was released in 2010.  The five publishers in question are Hachette Book Group, Harper Collins, Penquin, McMillian, and Simon & Schuster.  The price-fixing charges aren’t only being brought up by the U.S. government but also by European authorities and several states.

The motive behind the price fixing according to the DOJ is that when Amazon’s Kindle hit the market in 2007, it forced publishers to sell most of their books at $9.99 which was below the cost of the books.  The publishers needed to find a way to make Amazon raise the prices and colluding with Apple to raise prices ($12.99)  would allow that to happen, since Amazon had to “play ball” or risk losing publishers.    The DOJ has settled with three of the publishers Hachette, Harper Collins and Simon & Schuster, requiring that they allow other retailers (Amazon, Barnes & Noble) to lower their prices.  The publishers will also have to abandon their agreements with Apple and sign a new fair agreement.

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