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December 19, 2012
Penguin Settles e-Book Case
Penguin has settled e-book price fixing claims with the Department of Justice, leaving only Apple and Macmillan to defend the case. From the DOJ press release:
Under the proposed settlement agreement, Penguin will terminate its agreements with Apple and other e-books retailers and will be prohibited for two years from entering into new agreements that constrain retailers’ ability to offer discounts or other promotions to consumers to encourage the sale of the Penguin’s e-books. The proposed settlement agreement also will impose a strong antitrust compliance program on Penguin, which will include a requirement that it provide advance notification to the department of any e-book ventures it plans to undertake jointly with other publishers and that it regularly report to the department on any communications it has with other publishers. Also for five years, Penguin will be forbidden from agreeing to any kind of most favored nation (MFN) agreement that could undermine the effectiveness of the settlement.
The department is currently reviewing the proposed joint venture announced by Penguin and Random House Inc., the largest U.S. book publisher. Should the proposed joint venture proceed to consummation, the terms of Penguin’s settlement will apply to it.
That second paragraph is probably the motivating factor for Penguin entering into a settlement. I can’t imagine the Department approving the merger while litigation is pending. I don’t know if this will affect the defenses of Apple and Macmillan or particularly their resolve to continue. It may get lonely in the courtroom by the time the trial begins. [MG]