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Attorney General's News Release

April 11, 2012

Attorney General Koster charges U.S. publishers with antitrust law violations, price-fixing for e-books

Jefferson City, Mo. -- Attorney General Chris Koster and 15 other attorneys general filed suit today seeking restitution from Apple Inc. and three of the nation’s largest book publishers for colluding to fix the sales prices of electronic books.

The antitrust lawsuit stems from a two-year investigation into allegations that the publishing companies conspired to raise e-book prices. For years, retailers sold e-books through a traditional wholesale distribution model, under which retailers – not publishers – set e-books’ sales prices. However, the investigation revealed that Penguin, Simon & Schuster and Macmillan conspired with other publishers and with Apple to artificially raise prices by imposing a distribution model in which the publishers set the prices for bestsellers at $12.99 and $14.99.

To enforce their price-fixing scheme, the publishers and Apple relied on contract terms that forced all e-book outlets to sell their products at the same price. According to the states’ lawsuit, the coordinated agreement to fix prices resulted in e-book customers paying more than $100 million more than they would have absent the agreements.

“These publishing companies conspired to raise the price of e-books,” Koster said. “This conduct was both illegal and fraudulent under Missouri law. When companies compete, consumers benefit from lower prices, and in Missouri we will continue to protect consumers by identifying and stopping this type of anti-competitive behavior.”

The states’ antitrust lawsuit seeks injunctive relief to reverse the effects of the defendants’ anti-competitive conduct as well as damages for customers who paid artificially inflated prices for e-books. The lawsuit cites the publishers for violating the states’ antitrust laws and the federal Sherman Antitrust Act.

The states have reached an agreement in principle with Harper Collins and Hachette to provide significant consumer restitution as well as injunctive relief.

Koster serves as the national co-chair of the antitrust committee of the National Association of Attorneys General, and is a leading voice for antitrust prosecutions nationally.

Also participating in the lawsuit are: Connecticut, Alaska, Arizona, Colorado, Illinois, Iowa, Maryland, Ohio, Pennsylvania, Puerto Rico, South Dakota, Tennessee, Texas, Vermont and West Virginia.

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