Federal judge rules Apple Inc. colluded to raise E-book prices Indiana joins DOJ and 32 other states in declaring victory

INDIANAPOLIS – A federal judge ruled against Apple Inc. Wednesday for conspiring with major U.S. publishers to artificially raise the retail prices of electronic books (E-books).

The ruling stems from a multi-state lawsuit filed by Indiana Attorney General Greg Zoeller, 32 other states and the U.S. Department of Justice in April 2012. The U.S. District Court for the Southern District of New York found that Apple “played a central role in facilitating and executing” the conspiracy to raise E-book prices, and that “Apple’s orchestration” of the conspiracy was necessary to its success.

“Federal and state laws are designed to ensure the market remains competitive and fair,” Zoeller said. “This ruling emphasizes the importance of accountability in the E-book marketplace and highlights how the states and the federal government can work together to protect consumers.”

Zoeller said damages for consumers will be determined during a separate trial.

The U.S. Department of Justice, other states and Indiana already settled with five major U.S. publishers including Hachette Book Group Inc., HarperCollins Publishers L.L.C., Penguin Group (USA) Inc., Simon & Schuster Inc., and Holtzbrinck Publishers LLC d/b/a Macmillan for allegations relating to the same conduct. Zoeller said together those settlements will result in Indiana consumers receiving $2.7 million in refunds and more than $166 million for consumers nationwide. For more information about the refund process visit www.ebooksagsettlements.com or contact the Indiana Attorney General’s office at 1.800.382.5516.

The multistate lawsuits against Apple and the publishers came after a two-year investigation by the U.S. Department of Justice’s Antitrust Division and attorneys’ general offices.

For years, retailers sold e-books through a traditional wholesale-retail distribution model under which retailer outlets like Amazon or Barnes & Noble set prices. In 2010, before Apple entered the e-book market, bestsellers cost $9.99 which was a price set by Amazon.

According to the investigation, publishers conspired with Apple to shift their distribution model to allow publishers to set prices and sell e-books directly to consumers. This change artificially increased prices which accounted for the new bestseller pricing of $12.99 and $14.99.

The complaint said the publishers and Apple relied on contract terms that forced e-book retail outlets to sell their products at the same price therefore eliminating price competition. Under the agreement, Apple was guaranteed a 30 percent commission on e-books sold through its iBookstore.