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U.S. v. Apple, et al e-book complaint

U.S. v. Apple, et al e-book complaint

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Published by michelle_meyers

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Categories:Types, Business/Law
Published by: michelle_meyers on Apr 11, 2012
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07/10/2013

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UNITEDSTATES
DIST~i~oUR~Jj~r
FORTHESOUTHERNDISTRICTOFNEWYORK
UNITEDSTATESOFAMERlCA,Plaintiff,v.APPLE,INC.,HACHETTEBOOKGROUP,INC.,HARPERCOLLINSPUBLISHERSL.L.C.,VERLAGSGRUPPEGEORGVONHOLTZBRINCKGMBH,HOLTZBRINCKPUBLISHERS,LLCd/b/aMACMILLAN,THEPENGUINGROUP,ADIVISIONOFPEARSONPLC,PENGUINGROUP(USA),INC.,andSIMON
&
SCHUSTER,INC.,Defendants.
COMPLAINT
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TheUnitedStatesofAmerica,actingunderthedirectionoftheAttorneyGeneraloftheUnitedStates,bringsthiscivilantitrustactionagainstDefendantsApple,Inc.("Apple");HachetteBookGroup,Inc.(<<Hachette");HarperCollinsPublishersL.L.C.("HarperCollins");VerlagsgruppeGeorgvonHoltzbrinckGmbHandHoltzbrinckPublishers,LLCd/b/aMacmillan(collectively,"Macmillan");ThePenguinGroup,adivisionofPearsonpIcandPenguinGroup(USA),Inc.(collectively,"Penguin");andSimon
&
Schuster,Inc.("Simon
&
Schuster";collectivelywithHachette,HarperCollins,Macmillan,andPenguin,"PublisherDefendants")toobtainequitablerelieftopreventandremedyviolationsofSection1oftheShermanAct,15
U.S.c.
§
1.
 
Plaintiffalleges:
1.
INTRODUCTION1.Technologyhasbroughtrevolutionarychangetothebusinessofpublishingandsellingbooks,includingthedramaticexplosioninsalesof"e-books"-thatis,bookssoldtoconsumersinelectronicformandreadonavarietyofelectronicdevices,includingdedicatede-readers(suchastheKindleortheNook),multipurposetablets,smartphonesandpersonalcomputers.Consumersreapavarietyofbenefitsfrome-books,including24-houraccesstoproductwithnear-instantdelivery,easierportabilityandstorage,andadjustablefontsize.E-booksalsoareconsiderablycheapertoproduceanddistributethanphysical(or"print")books.2.E-booksaleshavebeenincreasingrapidlyeversinceAmazonreleaseditsfirstKindledeviceinNovemberof2007.IndevelopingandthenmassmarketingitsKindlee-readerandassociatede-bookcontent,Amazonsubstantiallyincreasedtheretailmarketfore-books.OneofAmazon'smostsuccessfulmarketingstrategieswastolowersubstantiallythepriceofnewlyreleasedandbestsellinge-booksto$9.99.3.Publisherssawtheriseine-books,andparticularlyAmazon'spricediscounting,asasubstantialchallengetotheirtraditionalbusinessmodel.ThePublisherDefendantsfearedthatlowerretailpricesfore-booksmightleadeventuallytolowerwholesalepricesfore-books,lowerpricesforprintbooks,orotherconsequencesthepublishershopedtoavoid.EachPublisherDefendantdesiredhigherretaile-bookpricesacrosstheindustrybefore"$9.99"becameanentrenchedconsumerexpectation.Bytheendof2009,however,thePublisherDefendantshadconcludedthatunilateraleffortstomoveAmazonawayfromitspracticeofofferinglowretailpriceswouldnotwork,andtheythereafterconspiredtoraiseretaile-bookpricesandtootherwiselimitcompetitioninthesaleofe-books,Toeffectuatetheirconspiracy,2
 
thePublisherDefendantsteamedupwithDefendantApple,whichsharedthesamegoalofrestrainingretailpricecompetitioninthesaleofe-books.4.TheDefendants'conspiracytolimite-bookpricecompetitioncametogetherasthePublisherDefendantswerejointlydevisingschemestolimitAmazon'sabilitytodiscounte-booksandDefendantApplewaspreparingtolaunchitselectronictablet,theiPad,and.consideringwhetheritshouldselle-booksthatcouldbereadonthenewdevice.Applehadlongbelieved
it
wouldbeableto"trounceAmazonbyopeningup[its
J
ownebookstore,"buttheintensepricecompetitionthatprevailedamonge-bookretailersinlate2009haddriventheretailpriceofpopulare-booksto$9.99andhadreducedretailermarginsone-bookstolevelsthatApplefoundunattractive.AsaresultofdiscussionswiththePublisherDefendants,ApplelearnedthatthePublisherDefendantssharedacommonobjectivewithAppletolimite-bookretailpricecompetition,andthatthePublisherDefendantsalsodesiredtohavepopulare-bookretailpricesstabilizeatlevelssignificantlyhigherthan$9.99.Together,AppleandthePublisherDefendantsreachedanagreementwherebyretailpricecompetitionwouldcease(whichalltheconspiratorsdesired),retaile-bookpriceswouldincreasesignificantly(whichthePublisherDefendantsdesired),andApplewouldbeguaranteeda30percent"commission"oneache-bookitsold(whichAppledesired).5.Toaccomplishthegoalofraisinge-bookpricesandotherwiselimitingretailcompetitionfore-books,AppleandthePublisherDefendantsjointlyagreedtoalterthebusinessmodelgoverningtherelationshipbetweenpublishersandretailers.Priortotheconspiracy,bothprintbooksande-booksweresoldunderthelongstanding"wholesalemodel."Underthismodel,publisherssoldbookstoretailers,andretailers,astheownersofthebooks,hadthefreedomtoestablishretailprices.Defendantsweredeterminedtoendtherobustretailpricecompetitionin
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