Still insisting on its innocence, Macmillan settles DOJ e-book case

Publisher Macmillan announced Friday that it is settling its case with the Department of Justice in its lawsuit over e-books. The DOJ had accused five major publishers and Apple of conspiring to set e-book prices; Macmillan was the last publisher to agree to settle.

“I had an old fashioned belief that you should not settle if you have done no wrong. As it turns out, that is indeed old fashioned,” Macmillan Chief Executive John Sargent wrote in a letter posted on the publisher’s website.

Hachette Book Group Inc., HarperCollins Publishers and Simon & Schuster Inc. reached settlements with the DOJ in September 2012. That was followed by a December settlement by Penguin Group (USA) Inc., related to its upcoming merger with Random House Inc., which is not a party in the suit. A trial against Macmillan and Apple is expected to begin in June.

Sargent, who had said that the DOJ’s terms were “too onerous,” has decided that the alternative is even worse. “Our company is not large enough to risk a worst case judgment,” he writes. “A few weeks ago I got an estimate of the maximum possible damage figure. I cannot share the breathtaking amount with you, but it was much more than the entire equity of our company.”

The DOJ suit alleged that Apple and the five publishers had conspired “to end e-book retailers’ freedom to compete on price, take control of pricing from e-book retailers and substantially increase the prices that consumers pay for e-books.” Publishers like Macmillan, with the agreement of the Authors Guild, countered that instituting Apple’s agency model for pricing e-books had actually opened up competition.

“I like to believe that we would win at trial,” Sargent writes. “But outcomes are hard to predict with certainty, particularly in a civil case with a low burden of proof. And so we agreed to settle with no admission of guilt. As with the other settling publishers, retailers will now be able to discount Macmillan e-books for a limited time. This change will take effect quickly.

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