The Justice Department is accusing Apple and publishers of conspiring to raise e-book prices. While publishers have caved to pressure from the department, Apple is strongly defends its agreements and says the Justice Department's behavior is "fundamentally unfair, unlawful, and unprecedented."
"The Government is seeking to impose a remedy on Apple before there has been any finding of an antitrust violation," says Apple. They note that this case revolves around "an alleged conspiracy to force Amazon to adopt agency" thus a settlement "enjoining collusion or precluding publishers from forcing agency on Amazon would be appropriate".
In an April 26th filing, Apple says that major publishers had already decided to eliminate discounts on wholesale book prices of e-books and to sell hardcover books to physical bookstores before Amazon, a practice called windowing. When it asked for a 30% commission, that publishers not undersell them, and that windowing be scraped, Apple says it received opposition from publishers.
"Early — and constant — points of negotiation and contention were over Apple's price caps and 30 percent commission. After Apple sent draft agency agreements to each publisher CEO on January 11, each immediately opposed Apple's price tiers and caps," Apple said in its 81-page proposed findings of fact.
Apple notes that in one case it had to appeal to News Corp to press its subsidiary publisher, HarperCollins, to sign the deal - which it did just one day before the iPad was launched.
The Justice Department claims that as a result of the alleged collusion that e-book prices rose $2 to $3 within a three-day period in early 2010. Apple disputes this saying that e-book demand 'exploded' and prices dropped on average to $7.34 from $7.97.
Another filing from the Justice Department claims that Steve Jobs "conceded the price-fixing conspiracy" by telling his biographer that Apple had "told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30 percent, and yes, the customer pays a little more, but that's what you want anyway.'"