Daily Report: Apple Is Facing Warning on Book Prices


1:55 p.m. | Updated Julie Bosman and Edward Wyatt of The New York Times report that the Justice Department, after months of investigation of pricing collusion between Apple and electronic book publishers, is talking with publishing companies about potential settlements and has been threatening a lawsuit.

Antitrust officials have been looking into whether Apple and five publishing companies agreed to work together to raise the price of electronic books.

In December, Sharis A. Pozen, the acting director of the Justice Department’s antitrust division, confirmed to a House subcommittee that the department was investigating the electronic book industry. A day earlier, the competition committee of the European Union said that it was conducting an investigation of Apple and five publishers over whether they had made illegal agreements to restrict pricing on e-books.

Ms. Pozen is scheduled to leave Justice at the end of April. One person close to the investigation, who was not authorized to discuss the case publicly and spoke on the condition of anonymity, said that the department was hoping to reach a decision before she departed on whether to file a lawsuit against five publishers if a settlement was not reached by then.

The Wall Street Journal reported earlier on Thursday, citing “people familiar with the matter,” that the Justice Department has threatened to sue the companies for colluding to keep prices high.

When it introduced the iPad in 2010, Apple shifted e-book selling toward a so-called agency model, where the publisher sets the price and Apple takes a 30 percent cut. That was different from Amazon’s approach, where it bought books from publishers at roughly half the cover price and then set its own retail price, often offering deep discounts.

Apple also told publishers that they could not sell their e-books more cheaply elsewhere. The Justice Department believes that the publishers and Apple acted in concert to raise prices, something that the companies have denied, The Journal said. European antitrust regulators are pursuing a similar investigation.

Amazon, meanwhile, is committed to selling e-books as cheaply as possible as a way to preserve the dominance of its Kindle devices. Last month it removed more than 4,000 e-books from its site after it tried and failed to get them more cheaply.