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Justice Department threatens Apple, publishers with antitrust suit

The U.S. Justice Department has warned Apple, as well as five major U.S. publishers, that an antitrust lawsuit may be brought against them for colluding to increase the prices of e-books, The Wall Street Journal reported on March 8.

Should Apple or the publishers seek to settle the case, industry analysts believe it could result in lower prices for e-books, but might also impact the e-commerce industry more broadly.

A spokesperson for the Department of Justice who would not confirm the reports said, “We have an ongoing investigation looking at the possibility of anti-competitive practices in e-book sales.” The spokesperson added that, “The matter continues to be open but I wouldn’t be able to say anything beyond that.”

This investigation was first confirmed at an oversight hearing last December by Sharis Pozen, head of the Antitrust Division of the Justice Department.

In addition to Apple, publishers Simon & Schuster, Hachette Book Group, Penguin Group (USA), Macmillan and HarperCollins Publishers are reportedly being investigated for violating antitrust law in an effort to counteract Amazon’s deep discounting of e-books.

Apple and a number of the publishers are in talks with the Justice Department, which could result in settlements having implications on e-commerce in general, particularly online media, according to The Wall Street Journal.

“It could eventually carry over to things like app commerce, game commerce and certainly movies,” said James McQuivey, VP and principal analyst at Forrester Research, pointing to the efforts of the film industry with the cloud-based movie system UltraViolet, which has involved the cooperation of major studios and retailers. “Any time everyone gets together and agrees on a particular way to sell something, it runs the risk of getting the interest of the Justice Department.”

McQuivey added that this investigation at least demonstrates that the Justice Department is willing to look into the complexities of these still fairly new digital commerce situations. Though he expects it may be a while before any resolution comes to this investigation, let alone any new investigations into other e-commerce areas are launched.

“It says volumes about how the Justice Department operates that it’s taken them two years to come to this conclusion,” McQuivey said. “It may be another two years to try and settle this thing.”

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