updated 10:15 pm EDT, Thu May 17, 2012
Federal complaint dropped, civil suit pending
One of the defendants dealing with multiple antitrust lawsuits has settled the overall complaint filed by many states' attorneys general. As a result, Judge Denise Cote granted a motion on Tuesday to dismiss Simon & Schuster from the federal complaint. The terms of the settlement have not been provided.
Simon & Schuster joins HarperCollins and Hachette with state-level settlements. Defendants that refuse to settle and deny any wrongdoing in the case are Apple, Macmillan Publishers, and the Penguin Group.
The suit was originally filed by the attorneys general from Texas and 15 other states. More states joined as the suit progressed -- 29 states are now involved. The plaintiffs in the complaints allege that Apple and the publishing houses worked together to manipulate e-book prices illegally and limit Amazon's control over the market at the same time.
A migration to an agency model, meaning multiple companies (the book publishers) acting through one company (Apple), is the core of the case. This standard model lets the publishers set book prices as a vehicle to avoid price wars. The defendants say their actions were in defense against Amazon's near monopoly of the market. Prior to 2010, Amazon possessed 90 percent of the e-book market. Amazon's e-book market share is currently estimated at 60 percent.
A class-action lawsuit on behalf of consumers is duplicating the state and federal case. Earlier this week, Apple and the publishers tried to get the complaint tossed out, but Judge Cote believes that Apple circumvented the openness of the e-book market by assisting the publishers to price fix, rather than competing independently. Simon & Schuster, HarperCollins, and Hachette are still named in the civil suit, regardless of having dealt with the complaint at the state and federal level.