Apple: price-fixing allegations ‘simply not true’

Apple’s has rejected claims from the US Justice Department that it colluded with some of the world’s biggest book publishers to fix prices.

In an interview with the Wall Street Journal Apple spokeswoman Natalie Kerris said the charges were “simply not true”.

The US government has previously sued Apple, along with five other publishers, for conspiring to fix the price of ebooks. It later negotiated a compromise with three of the publishers, which could result in cheaper ebooks for consumers.

Kerris defended the way Apple works with publishers, saying it was comparable to the way it deals with the app developers.

“Just as we have allowed developers to set prices on the App Store, publishers set prices on the iBookstore,” she told the newspaper.

As we’ve explained previously the Justice Department’s case rests on a piece of legislation called Sherman’s Law. The law is intended to guard against business activities that lead to anti-competitive behaviour in the marketplace.

In a traditional wholesale model”, publishers such as Simon & Schuster Inc. — one of the publishers under investigation — would sell books to online (Amazon) or brick and mortar (Barnes & Noble) retailers for roughly 50% of the recommended cover price. The retailer could then set its own price, equal to or higher/lower than the cover price.

When it came to ebooks, Amazon decided to set prices as low as US$9.99. This didn’t sit particularly well with the publishers. Enter Apple.

The tech giant allows the publishers to set their own prices, as long it gets a 30% cut. So far so good.

Here’s where it gets interesting though. In its agreements with publishers, Apple inserted a stipulation stopping them from selling the same book at a lower price with another retailer.

The publishers went on to implement the policy across the board, effectively killing the competitive edge of players like Amazon.

So let’s see, we have a company that loves closed systems in which users have its products, and its products alone getting five massive publishers to agree on something that forces everyone to sell at the same prices. And they’re all crying innocent. This case is only going to get more interesting.