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Penguin Settles Price Fixing Suit with the DOJ

Penguin Group has reached a proposed settlement with the Department of Justice (DOJ) over the price fixing lawsuit filed in April 2012. Macmillan (as Holtzbrinck Publishers LLC) and Apple are the only two remaining parties who have not settled with the DOJ about an alleged conspiracy to fix eBook prices.

The U.S. District Court for the Southern District of New York must approve the settlement, but it would end Penguin’s role in the suit. In addition, the DOJ noted that they are “currently reviewing” the merger deal struck between Penguin and Random House. If the merger occurs, then “the terms of Penguin’s settlement will apply to it.”

Here’s more from the DOJ Antitrust Division chief of staff Jamillia Ferris: “Since the department’s settlement with Hachette, HarperCollins and Simon & Schuster, consumers are already paying lower prices for the e-book versions of many of those publishers’ new releases and bestsellers … If approved by the court, the proposed settlement with Penguin will be an important step toward undoing the harm caused by the publishers’ anticompetitive conduct and restoring retail price competition so consumers can pay lower prices for Penguin’s e-books.”

The DOJ outlined the terms of the settlement: “Penguin will terminate its agreements with Apple and other e-books retailers and will be prohibited for two years from entering into new agreements that constrain retailers’ ability to offer discounts or other promotions to consumers to encourage the sale of the Penguin’s e-books.  The proposed settlement agreement also will impose a strong antitrust compliance program on Penguin, which will include a requirement that it provide advance notification to the department of any e-book ventures it plans to undertake jointly with other publishers and that it regularly report to the department on any communications it has with other publishers.  Also for five years, Penguin will be forbidden from agreeing to any kind of most favored nation (MFN) agreement that could undermine the effectiveness of the settlement.”

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