Apple Agrees to $400M Settlement in Ebook Price Fixing Case

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Apple has decided not to fight a class action lawsuit over claims it orchestrated a price fixing scheme to artificially drive up the cost of books and will instead pay a US$400 million settlement. That payout is contingent on the outcome of Apple's appeal in the DOJ's antitrust case, so don't expect to see money changing hands any time soon.

Apple agrees to $400 million settlement in ebook price fixing class action lawsuitApple agrees to $400 million settlement in ebook price fixing class action lawsuit

New York State Attorney General Eric Schneiderman said,

In a major victory, our settlement has the potential to result in Apple paying hundreds of millions of dollars to consumers to compensate them for paying unlawfully inflated E-book prices. We will continue to work with our colleagues in other states to ensure that all companies compete fairly with the knowledge that no one is above the law.

News of the settlement first surfaced in June, although details of the deal weren't released at the time.

The terms of the settlement say Apple will pay $400 million plus $20 million to the 33 states in the class action lawsuit if the original Federal Court ruling is upheld, but that number drops to $50 million total should the appeal work out partially in Apple's favor. If the original ruling is overturned completely, Apple won't have to pay out any money in the settlement.

Apple and the top book publishers were all accused of conspiring to artificially raise book prices and ultimately faced a Federal lawsuit from the Department of Justice. The publishers all settled out of court to avoid potentially crippling fines, although Apple stayed the course and went to trial.

Judge Denise Cote sided with the DOJ and ruled that Apple was the ring leader in the conspiracy. Apple denied any wrong doing and vowed to appeal her ruling.

Regardless of the final outcome in Apple's appeal, the settlement terms add up to the best overall outcome. Both sides get to dramatically cut down on legal expenses, Apple minimizes its potential payout, and the states are ensured some money unless the appeal works out completely in Apple's favor.

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Settling with the States in the class action lawsuit makes financial sense for Apple. The alternative includes ongoing legal expenses and a potentially much higher fine that it's facing through the settlement. Agreeing to the deal doesn't mean Apple is admitting any wrong doing, although that's exactly how the State Attorneys General will spin it.



Now what if Apple were to forgo its 30% take on the price of books. I’m assuming book sellers can charge as they please, one price to book seller x and another price to book seller y.
Would that put Amazon in a difficult position. It does like to sell cheap, but were Apple selling at same cost (what they have to pay out for a book, they charge the same) and if Amazon wanted to compete, wouldn’t they have to do the same.
This is assuming a book seller could charge a different price to different book sellers.
Now if the book companies, knowing they were going to get back 100% on each book, having not to pay any percentage to Apple could they not sell cheaper to Apple than to Amazon who would likely be taking profit from the book sales? Amazon already tries for the lowest take on what they sell but selling below cost would be an owee.

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