By Nate Raymond
Aug 7 Five of the largest U.S. publishers
objected to tough new restrictions sought by the U.S. government
against Apple Inc for illegally conspiring to raise
In a motion filed on Wednesday in U.S. district court in
Manhattan, the publishers said a proposed final order in the
case would effectively prevent Apple from entering agreements
that limit its ability to discount books.
The publishers said provisions proposed by the U.S. Justice
Department would instead punish the publishers, which had
already reached settlements with the federal government and
dozens of states, paying $166 million to benefit consumers.
"Despite achieving their stated goal of returning price
competition, plaintiffs now seek to improperly impose
additional, unwarranted restrictions on the settling defendants,
thereby depriving each publisher of the benefit of its bargain
with plaintiffs," the publishers wrote.
The motion came ahead of a Friday hearing on whether the
court should adopt remedies proposed by the Justice Department
and 33 U.S. states and territories after a ruling last month by
U.S. District Judge Denise Cote that Apple conspired with the
The Justice Department accused Apple of conspiring to
undercut Amazon.com Inc's e-book dominance, causing
some e-book prices to rise to $12.99 or $14.99 from the $9.99
that the online retailer charged. Amazon once had a 90 percent
Following Cote's ruling, the government asked that she
require Apple to end contracts with the five publishers and be
prevented for five years from entering contracts that the
Justice Department says would restrict Apple from competing on
Apple would also be forced to hire an internal antitrust
compliance officer and employ a court-appointed external
But objections have now been posed by the publishers, which
include Lagardere SCA's Hachette Book Group Inc, News
Corp's HarperCollins Publishers LLC, Penguin Random
House LLC, CBS Corp's Simon & Schuster Inc and
Verlagsgruppe Georg von Holtzbrinck GmbH's Macmillan.
In their motion, the publishers said the settlement would
effectively eliminate Apple's ability to enter agreements
allowing for discounts by eliminating for five years its use of
so-called agency agreements, in which publishers set prices and
Apple gets a commission.
As a result, the publishers say the proposals don't impose
any limitation on Apple's pricing behavior and instead
"effectively punish" publishers by preventing them from entering
into agency agreements with the iPad manufacturer.
The publishers say the Justice Department's proposal
conflicts with their own settlements with the government, which
allowed them, with certain limitations, to enter into agency
deals with retailers.
A spokesman for Apple declined comment.
"The proposed settlement with Apple, if approved by the
court, would prohibit Apple from entering agreements that limit
retail price competition during a reset period," said a
spokeswoman for the Justice Department in an email. "The
proposed relief does not modify the terms of the settlements we
reached with the publisher defendants."
The case is U.S. v. Apple Inc et al, U.S. District Court,
Southern District of New York, No. 12-02826.