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TheStreet Open House

New Allegations In E-Books Price-Fixing Lawsuit, Says Hagens Berman

Hagens Berman attorneys representing e-book purchasers in a case that claims five major publishers conspired with Apple (NASDAQ: AAPL) to fix the price of e-books today filed an updated complaint including new information and allegations.

The updated complaint names five of the nation’s top publishers including HarperCollins Publishers, a subsidiary of News Corporation (NASDAQ: NWSA); Hachette Book Group; Macmillan Publishers; Penguin Group Inc., a subsidiary of Pearson PLC (NYSE: PSO); and Simon & Schuster Inc., a subsidiary of CBS (NYSE: CBS), as well as Apple (NASDAQ: AAPL), as defendants.

In the class-action lawsuit, consumers claim that the publishers feared Amazon’s $9.99 pricing model to such a degree that they conspired with Apple to force Amazon to adopt a new agency model in which publishers set prices directly, effectively ending Amazon’s ability to provide consumer-friendly pricing for e-books.

After the publishers unanimously and simultaneously adopted the new pricing model, the price of e-books shot up 30 percent, according to the complaint.

“The information we’ve included in this new filing shows the deep antagonism that publishers had toward Amazon for its consumer-friendly pricing,” said Hagens Berman managing partner Steve W. Berman, who is lead counsel in the case. “Since we began the action last August we’ve uncovered statements from executives at several publishers that demonstrate they viewed Amazon as a significant threat to the long-term survival of their profitability.”

Berman added that the fear and loathing of the competitive threat by Amazon led the publishers to take strident -- and illegal -- actions in an attempt to shore up their failing business model. “We intend to show that the big publishers saw the sea change in the delivery of books, and agreed to a price-fixing conspiracy as a last-gasp attempt to maintain profit margins.”

The complaint cited a statement made by David Young, Chairman and CEO of Hatchett Book Group USA, who told The New Yorker, “If it’s allowed to take hold in the consumer’s mind that a book is worth ten bucks, to my mind its game over for this business.”

The complaint also quotes Macmillan CEO John Sargent, who posted a blog claiming that the market was previously “fundamentally unbalanced” but that thanks to the agency model, it would now be “stable and rational.”

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