Publishers say e-book restrictions would hurt them, not Apple

The US had proposed remedies prohibiting agreements with Apple that use an agency pricing model

Five book publishers have objected to restrictions that would be placed on Apple's business after it was found guilty last month of conspiring to fix prices for e-books.

A New York federal judge ruled in July that Apple conspired with the publishers to fix prices for e-books, snuffing out competition and leading to "significantly higher prices" for consumers.

The accused publishers, including Penguin, HarperCollins and Macmillan, had all settled the charges against them with the U.S. Department of Justice, but Apple went to trial and lost. The company says it plans to appeal.

In the meantime, the DOJ proposed a set of remedies last week to prevent Apple from engaging in the same conduct again. In a filing Wednesday in a Manhattan federal court, the publishers objected to those restrictions, specifically a part they say would prevent their use of the so-called agency pricing model.

"The proposed provisions would have that effect by preventing Apple from entering into any agreements that limit its ability to discount e-books for five years," the publishers' lawyers wrote. "In other words, the provisions do not impose any limitation on Apple's pricing behavior at all; rather, under the guise of punishing Apple, they effectively punish the [publishers who settled the case] by prohibiting agreements with Apple to use the agency model."

Under the agency model, publishers set their own prices for their books, rather than the retailers that sell them. Essentially, the government had accused Apple and the publishers of switching to the agency model to shut out retail price competition.

In the filing Wednesday, the publishers argue that under the settlements they agreed to they would still be able to use the agency model. They asked the court to block any restrictions on Apple that would interfere with that ability.

The court will now have to decide if it agrees with their objection.

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James Niccolai

IDG News Service
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