August 16, 2012
Apple, Publishers, Others File Objections to Settlement in e-Book Case
Apple, the Author’s Guild, Penguin, and Macmillan filed their comments with the Court on the proposed settlement between the Justice Department and settling publishers in the case over alleged collusion in e-book pricing. They are obviously against it.
Apple argues that the settlement is premature. Forcing a termination of its contracts with the settling publishers would harm its business if the company prevailed in the suit. Apple could not easily reinstate those contracts should that happen. The Court should delay the settlement until the main issue is settled. Otherwise Apple may be forced to appeal the settlement before the main issue is resolved. In any event, Apple does not have the market power claimed by the government, being third behind Amazon and Barnes & Noble.
Penguin argues that there are no economic studies supplied by the government that support the government’s contention that the agreements caused e-book prices to rise. They cite comments to the effect that e-book prices have gone down. Moreover, it’s a complicated market out there with no uniform pricing. Amazon, for example, priced e-books higher than $9.99 for titles with hard cover pricing over $20.
Macmillan argues that the settlement fails to take into account its effects on other parts of the book market. The publisher complains that the settlement could hand Amazon a monopoly through the use of predatory pricing. It also dismisses the government’s claim that Amazon’s conduct does not rise to that level. The strategy here and in the other filings is to make this case about Amazon rather than the conduct between Apple and the publishers, especially since Amazon is not a party in the proceedings.
The brief by the Authors Guild in particular takes that tack. It states that giving unfettered pricing power to Amazon will destroy brick and mortar bookstores. These are the showrooms for literature where people naturally discover books they will buy. All the Guild wants is a vibrant marketplace. The settlement would not make that happen.
I can understand Apple’s point. What happens if the company wins? As to the others, it seems to me they are more interested in preserving the form of an existing market through artificial controls such as these contracts. The antitrust laws at their heart are to benefit consumers rather than producers. Other than claiming there are no studies to support the government’s position, that point is minimized in their filings.