Back to main

Apple Reaches Settlement on E-Books


Apple Inc. has reached a settlement in a civil class-action lawsuit pertaining to the pricing of e-books, according to a filing with a New York court on Monday.

In a letter to U.S. District Judge Denise Cote, Steve Berman, an attorney representing consumers and some U.S. states, said Apple and the plaintiffs reached an agreement in principle. The exact terms of the settlement are under seal and need to be approved by the court.

The plaintiffs had been seeking $840 million from Apple, claiming that the company overcharged consumers by $280 million for e-books and that it should have to pay three times that amount. An Apple spokeswoman declined to comment.

The settlement is contingent on the result of Apple's appeal of last year's antitrust ruling by Judge Cote that Apple colluded with five major U.S. publishers to drive up the e-book prices.

Apple has continued to argue that it hasn't violated any antitrust laws and has fought to remove a court-appointed monitor.

In the civil antitrust lawsuit, filed more than two years ago, Justice Department prosecutors argued that Apple used publishers' dissatisfaction with Amazon.com Inc.'s aggressive e-book discounting to shoehorn itself into the digital- book market when it launched the iPad in 2010. Apple's proposal: Let publishers set prices themselves. That led to Amazon losing the ability to price most e-book best sellers at $9.99, causing prices to rise.

At the time, Amazon was the dominant player in the market, accounting for between 80% and 90% of all e-book sales. However, the major publishers were concerned that Amazon was selling books at a loss in order to gobble up market share and had threatened to begin withholding some of their most popular books from the online seller.

In her ruling last year, Judge Cote said the evidence was clear that Apple, despite its claims that it negotiated fiercely and separately with each publisher, was at the center of the conspiracy. She also found the company liable to claims by the states that had joined the Justice Department's suit.

The government claimed that CEOs of the publishing companies met regularly to discuss how to respond to steep discounting of their e-books by Amazon, a practice they disliked. The executives also called and emailed each other to craft a solution to what one of them called "the wretched $9.99 price point," the suit said.

The five publishers and Apple hatched an arrangement that lifted the price of many best-selling e-books to $12.99 or $ 14.99, according to the suit. The publishers then banded together to impose that model on Amazon, the government alleged.

The lawsuit upended an industry already undergoing wrenching change as printed books continued to give way to electronic books and publishers tried to keep their role as gatekeeper and ensure that e-books were profitable.

Judge Cote appointed a monitor last year to oversee Apple's e-book pricing reform efforts.

Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


  (END) Dow Jones Newswires
  06-17-140355ET
  Copyright (c) 2014 Dow Jones & Company, Inc.