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Hachette Settles with the Department of Justice

Following in HarperCollins’ footsteps, Hachette has “reluctantly agreed” to settle with the Department of Justice rather than face a lawsuit over the agency model for eBook pricing. Simon & Schuster has settled as well.

The publisher issued a longer statement that did not detail the terms of the settlement. The complete Hachette Book Group release is reprinted below–here is an excerpt from HBG’s official  statement:

Hachette was not involved in a conspiracy to illegally fix the price of eBooks, and we have made no admission of liability.  Hachette’s unilateral adoption of agency was designed to facilitate entry by a new retail competitor and to increase the diversity and health of retail booksellers, and we took these actions knowing that Hachette itself would make less money than before the adoption of agency.  Although we remain confident that we did not violate the antitrust laws, we faced the prospect of lengthy and costly litigation with government plaintiffs with virtually unlimited resources.

STATEMENT OF HACHETTE BOOK GROUP

After much deliberation, Hachette Book Group has reluctantly agreed to join the settlement of this matter with the U.S. Department of Justice (DOJ), and to begin the process of settling with the State Attorneys General.

Hachette was not involved in a conspiracy to illegally fix the price of eBooks, and we have made no admission of liability.  Hachette’s unilateral adoption of agency was designed to facilitate entry by a new retail competitor and to increase the diversity and health of retail booksellers, and we took these actions knowing that Hachette itself would make less money than before the adoption of agency.  Although we remain confident that we did not violate the antitrust laws, we faced the prospect of lengthy and costly litigation with government plaintiffs with virtually unlimited resources.  Hachette has decided that the costs, uncertainties, and distractions of this litigation would be too disruptive to our business.

Hachette is committed to publishing great books and nurturing and supporting our authors and our readers. This has always been our motivation. We are disappointed that we were unable to persuade the Department of Justice of the merits of our actions, but believe much has been accomplished to increase diversity and competition in the market for eBooks since the advent of the agency model.

Two years ago, Amazon effectively had a monopoly on the sale of eBooks and eReaders, and was selling products below cost in an effort to exclude competitors. Today, consumers have multiple sources to choose from, and the price of dedicated e-readers has fallen dramatically. And the fact that 82% of Hachette’s eBooks are currently priced at $9.99 or less — including many books by our bestselling authors — belies any notion that we increased prices on all eBooks.

Hachette has embraced the innovations and new opportunities that eBooks present for publishers, authors and readers.  Although the terms of the DOJ settlement will place some constraints on agency distribution over the next two years, we are pleased that we will continue to be able to choose our own distribution channels and retail partners.

The terms of our understanding with the State AGs will put Hachette on a path to conclude our dispute with the State AGs and to concluding the existing consumer class actions, without placing any additional constraints on our distribution operations and choices.  We see this as critical to putting these disputes behind us and focusing our attention on the business of inspiring, developing, and distributing great books.

In the wake of this settlement, we believe the DOJ and the State AGs have a responsibility to consumers to ensure that the market for eBooks remains diverse and competitive, and that we don’t return to the days of monopoly, with one company controlling what and how people read eBooks.

4/11/2012

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