2:06pm

Tue June 17, 2014
Law

Settlement Brings An Early End To Apple's Price-Fixing Case

Originally published on Tue June 17, 2014 6:33 pm

Transcript

MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel. Apple has reached an out-of-court settlement with dozens of states and a number of other plaintiffs over e-book price fixing. The company was facing more than $800 million in damages. NPR's Mandalit Del Barco reports.

MANDALIT DEL BARCO, BYLINE: Apple introduced its entry into the e-book market in 2010 and kept upgrading its features.

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TIM COOK: Ibooks, of course, makes it a pleasure to read on any of your iOSOS devices.

DEL BARCO: At a press event two years ago, Apple's CEO Tim Cook promised an elegant digital bookshelf for hundreds of electronic books.

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COOK: And just one tap and the bookshelf flips to reveal the iBookstore, where you'll find bestsellers.

DEL BARCO: Apple partnered with publishers to take on the e-book market dominated by Amazon, says Mike McGuire, an analyst with Gartner research. He says Apple agreed to let the publishers set the prices under what's known as the agency model.

MIKE MCGUIRE: Where the distributor, in this case Apple, just says we'll take a percentage of whatever price you set, whereas Amazon would go in and buy products wholesale pricing and then could set the price they like.

DEL BARCO: Publishers hated Amazon's $9.99 pricing for e-books. And the Department of Justice accused Apple of conspiring with the five big publishers to illegally increase the price of e-books. Last summer, a federal court agreed. Apple continues to appeal that case, but the five major publishers agreed in court to pay more than $166 million to settle the charges. That left Apple alone to be sued by 33 states and territories on behalf of consumers seeking $840 million in damages. So Apple decided to settle, says Mike McGuire.

MCGUIRE: I think they were saying if the publishers are going to saddle up, you know, do we want to be the one company kind of fighting for the agency model? And I think everybody decided that it was better to kind of clear the decks and cut the losses, so to speak.

DEL BARCO: Terms of the settlement are under seal pending Apple's appeal of the federal case. Mandalit Del Barco, NPR News. Transcript provided by NPR, Copyright NPR.