Schneiderman announces $75 million settlement with e-book publisher to resolve price-fixing allegations

New York State Attorney General Eric T. Schneiderman joined 32 other states Wednesday in announcing an antitrust settlement with Penguin Group (USA) Inc. The settlement requires Penguin to pay $75 million to resolve the states' claims that Penguin colluded with other major publishers and Apple Inc. to fix the prices of electronic books (e-books). New York consumers are eligible for refunds of about $11.7 million from this and previous settlements.

The agreement with Penguin must be approved by the U.S. District Court for the Southern District of New York. Following court approval, consumers nationwide - including those represented by the attorneys general of the 33 states and territories and those represented by private counsel in a related class action - will receive $75 million in compensation. In addition, injunctive provisions included in the settlement ensure that e-book retailers will have greater freedom to reduce prices of e-book titles going forward.

"E-book consumers are protected by our laws, and efforts to circumvent those protections will not be tolerated by my office. Today's and earlier settlements provide restitution to consumers harmed by the price-fixing of e-books orchestrated by the five publishers and Apple," Schneiderman said. "The settlements provide injunctive relief designed to prevent future anticompetitive conduct by e-book retailers and to restore competition to the e-book market."

It was alleged by the states in the lawsuit that the five e-book publishers and Apple agreed in 2010 to go to any agency model for the sale of e-books. By using the agency model, the publishers were able to set the prices of e-books and prevent discounting by e-book retailers such as Amazon. Amazon had been selling many New York Times bestsellers at a $9.99 price point. The publishers and Apple - who entered the e-book business in 2010 - wanted e-books sold at a higher, more profitable price point.

The states had previously settled with four other e-book publishers. The settlements reached with Hachette Book Group Inc., HarperCollins Publishers LLC, and Simon & Schuster Inc., in August 2012, required the payment of a total of $69 million in consumer compensation. An agreement reached with Holtzbrinck Publishers LLC d/b/a Macmillan earlier this year resulted in a payment of $20 million on behalf of consumers. As a result of these five settlements, consumers nationwide will receive a total of $164 million. New York e-book purchasers will receive approximately $11.7 million in compensation from the settlements.

The states' antitrust action against Apple Inc., based on the same allegations, remains pending in the United States District Court for the Southern District of New York, with a trial scheduled in June.

For restitution purposes, most consumers will get a notice directly from their e-book retailers.

Additionally consumers can click here for information on the settlement.

States and territories participating in the settlement are: Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, D.C., Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Mexico, New York, North Dakota, Ohio, Pennsylvania, Puerto Rico, South Dakota, Tennessee, Texas, Utah Vermont, Virginia, West Virginia and Wisconsin.