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Penguin settles in e-book price fixing case

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Penguin has settled with the Department of Justice in the e-book price-fixing case brought against Apple and five publishers this year. Three of the other publishers involved &38212; Hachette, Simon & Schuster and HarperCollins — have already agreed to settle.

Penguin and Macmillan were holdouts, insisting that the case had no grounds. "We did not collude," said Macmillan CEO John Sargent in April, when the DOJ brought its case.

In announcing its settlement, Penguin concurred. “Penguin has always maintained, and continues to maintain, that it has done nothing wrong and has no case to answer,” its statement read.

What has changed for Penguin is its recent betrothal to Random House. In October, the two publishers announced a merger; if approved by European Union regulators, they will become Penguin Random House. (Not, sadly, the more whimsical Random Penguin.)

Random House, the world's largest publishing company, was not involved in the DOJ case. That's because Random House was not part of the launch of Apple's iBookstore, which debuted a pricing rubric for e-books much like Apple uses for music, known as the "agency model." Agency pricing meant publishers, who had formerly sold their books wholesale, could set the retail end price and take a percentage, instead of a fixed price. The e-book retailer, the sales agent, took a percentage as well.

Penguin, Macmillan, Hachette, HarperCollins and Simon & Schuster had signed on and used this new model to set prices for their e-books. The move to agency pricing spurred the DOJ suit, which centered on the fact that publishers and Apple forced other e-booksellers, notably Amazon, to adopt a similar pricing model.

With a merger between Random House and Penguin on the horizon, Penguin's involvement in the DOJ case stood to present some problems. “It is also in everyone’s interests that the proposed Penguin Random House company should begin life with a clean sheet of paper,” the company added.

As Penguin and Random House walk down the aisle, the lawsuit behind them, Macmillan and Apple are left to fight the DOJ's case.

 

Carolyn Kellogg: Join me on Twitter, Facebook and Google+

Copyright © 2014, Los Angeles Times
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