Apple iBooks 2
US Justice Department sues Apple, publishers in e-book price scheme

Apple Inc. has denied accusations it conspired to fix prices for e-books, in the company of major book publishers (watch the video above).

"Contrary to allegations in lawsuits by the Justice Department and 15 states, Apple fostered innovation and competition by introducing its iBookstore in 2010," said Apple spokesman Tom Neumayr, according to Bloomberg Businessweek. Neumayr further noted customers gain more benefit from e-books that are more interactive and engaging. The Cupertino company further reiterated that its foray into the e-books market has broken the monopoly of online retailer Amazon over the publishing industry.

The lawsuits claim that Apple and the five accused publishers have cost consumers more than $100 million in the past two years by adding $2 or $3, sometimes as much as $5, to the price of each e-book.

"Defendants' ongoing conspiracy and agreement have caused e-book consumers to pay tens of millions of dollars more for e-books than they otherwise would have paid," the lawsuit added.

Earlier, the US Justice Department sued Apple Inc. (Nasdaq: AAPL) and the five publishing giants, accusing them of conspiring to fix prices for e-books. The case was filed in the US District Court in New York by the department's antitrust division, which last year successfully opposed the takeover of T-Mobile USA by AT&T Inc. (NYSE: T).

Shares of Apple, which soared on Wednesday, opened at $636.87 but fell $2.24 to $626.20 at close. The company made no comment on the Justice Department's lawsuit.

The book publishers charged in the civil lawsuit are Hachette Book Group (part of French media conglomerate Lagardere SCA) (EPA: MMB); HarperCollins, a unit of Rupert Murdoch's News Corp. (NYSE: NWS); CBS Corp.'s (NYSE: CBS); Simon & Schuster; Pearson PLC's (LON: PSON) Penguin Group (USA); and Macmillan, a unit of Germany's privately held Verlagsgruppe Georg von Holtzbrinck GmbH.

Negotiations over e-book pricing were ongoing for much of this year but eventually broke down, resulting in Wednesday's suit.

"Executives worked together to eliminate competition among stores selling e-books, ultimately increasing prices for consumers," said US Attorney General Eric Holder, at a press briefing.

Simon & Schuster, Hachette and HarperCollins announced an immediate settlement. Apple and Penguin have explicitly denied any collusion on the pricing of e-books. They will battle out the case.

New York-based MacMillan have also confirmed they will not settle.

"The terms the DOJ demanded were too onerous," the company's Chief Executive, John Sargent, said in a statement cited by The New York Times, while the publisher engaged in settlement talks.

Meanwhile, a separate suit, lodged by US states against the publishers, also resulted in partial resolution. While Hachette and HarperCollins settled with an agreement to pay a combined $52 million, the other publishers simply refused to budge.

"This scheme would have cost consumers millions in excessive prices and stifled the development of an important form of e-commerce," said David Balto, a lawyer who was head of policy for the US Federal Trade Commission during the administration of President Bill Clinton, according to Businessweek.

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