Penguin Agrees to $75M Payout in ebook Price Fixing Settlement

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Penguin is a step closer to ending its headaches over ebook price fixing allegations now that the publisher has agreed to a US$75 million settlement with states and consumers. The proposed settlement is part of a deal in a lawsuit that claims the company colluded with other publishers and Apple to artificially raise the price of ebooks.

Penguin agrees to $75 million settlement in ebook price fixing lawsuitPenguin agrees to $75 million settlement in ebook price fixing lawsuit

This lawsuit follows a Federal case from the Department of Justice that Penguin settled in 2012. The Federal case named Penguin, along with Apple, Simon & Schuster, Harper Collins, and Hachette as companies that all worked together to set higher prices for ebooks and force retailers into a model where publishers set book prices instead of retailers.

All of the publishers eventually settled with the DOJ instead of facing potentially crippling fines, leaving only Apple facing a trial in the case. Apple is still calling the collusion claims false and said it negotiated with each publisher independently.

The case where Penguin just agreed to the new $75 million settlement was brought by 33 states and also includes class-action lawsuits from consumers. Steve Berman, managing partner at Hagens Berman which represented the states and consumers in the case said, "This proposed settlement is a powerful demonstration of what is possible when federal, state and private class antitrust enforcement lawyers work together."

While the parties represented in the lawsuit look at Penguin's settlement, and consession to drop efforts to change ebook pricing for two years, as a win for consumers and anti-competitive market practices, Apple is still moving forward with its allegations that the ebook market -- along with ebook prices -- is tightly controlled by Amazon. Apple's argument is that Amazon, and not publishers, is controlling the book market and as such can keep competitors out of the game and kill competition.

Penguin's settlement still needs court approval, which will likely come some time this summer.

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Spending $75 million to end this civil anti-competition case on top of the settlement Penguin agreed to last year in the DOJ case is a lot of money, which means the publisher was probably facing the prospect of even higher penalties if it lost in court. Ouch.

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Yet, Penguin is the only one of the five publishers that has still not abided by the settlement with the DOJ and relinquished control of their ebook prices. Even MacMillan, who settled later, relinquished control months ago. Any idea what the hold up is? Is the first settlement not court approved yet? Or is Penguin already in breach of the settlement? Also, does anyone which 33 states settled? Thanks!

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