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Price Fixing Lawsuits Against Publishers Summarized with Timeline of Events


In April, the DOJ filed suit against five of the big 6 publishers alleging an illegal price fixing conspiracy with Apple that increased prices of digital books.  Three publishers have agreed to a settlement which has yet to be approved by the court.

Penguin, Macmillan and Apple are proceeding forth with the suit against several of States, Class Action Plaintiffs and the Department of Justice.  The trial is set for June 3, 2013.

The following includes a timeline of events as well as background posts that explain the suit.


  • July 6, 2012 – New initial report must be filed reflecting the scheduling order.  A deadline for initial disclosures will be set. It was for July 2 but I’m not sure if that date will hold up.  The initial disclosures are mandated by Rule 26 of the Federal Rules of Civil Procedure. They were enacted to require parties to not procrastinate and move cases faster through the system.  The initial disclosures will be the only interesting thing to read until next year when summary judgment motions are filed. Each parties’ initial disclosures must include the following:
    • Witnesses:  the name and, if known, the address and telephone number of each individual likely to have discoverable information—along with the subjects of that information—that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment;
    • Exhibits:  a copy—or a description by category and location—of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment;
    • Damages:  a computation of each category of damages claimed by the disclosing party—who must also make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based, including materials bearing on the nature and extent of injuries suffered
  • July 9, 2012 – the State AGs and Class Action Plaintiffs file their initial disclosures because they do not have to file anything that duplicates the DOJ’s list of disclosures.
  • July 11, 2012 – the settling defendants have to renew their request for a stay of the proceedings.
  • July 20, 2012 – Parties to contact chambers of the Honorable Kimba Wood to schedule settlement discussions.
  • August 3, 2012 – DOJ to file for entry of the proposed Judgment.
  • August 15, 2012 – Responses to the DOJ’s motion for entry of proposed judgment. Cannot exceed 5 pages. Expect the parties to wax ad naseum about Amazon although the settling defendants will likely put forward supportive statements.
  • August 20, 2012 – the settling defendants anticipate filing a proposed settlement for the States’ AG suit.
  • August 22, 2012 – Response by the DOJ
  • September 17, 2012 – Fact depositions may begin.
  • November 16, 2012 – Parties to identify experts and testimony subject matter.
  • November 16, 2012 – Opening class certification brief served
  • December 18, 2012 – Initial trial witness lists due
  • April 26, 2013 – Joint Preliminary Trial Report (including Proposed Findings of Fact, Conclusions of Law, Memoranda of Law, direct testimony affidavits, and deposition designations)
  • June 3, 2013 – Trial date of only the DOJ matter

  • September 13, 2013 – Summary judgment motions filed for State and Class
  • October 4, 2013 – Opposition to Summ J
  • October 18, 2013 – Reply to Opposition
  • September 13, 2012 – Motions for summary judgment.  This will be good reading. 
  • October 4, 2012 – Responses due.
  • Nov 16, 2012 – motion to certify class must be filed.
  • April 26, 2013- Pretrial order
  • April 16, 2012 – Motions in limine (this is a motion parties file to keep evidence out)
  • May 24, 2013 – Final Pretrial
  • June 3, 2013 – Trial begins (also when BEA 2013 begins)

I think there were some errors in the docket entry and hopefully the status report filed on the 6th will clear those up.


A Primer on Antitrust Law

There is no written agreement of the defendants to fix prices.  Instead, the government is arguing that the conduct of the publishers is indirect evidence of the agreement hence the allegations of meetings,  phone calls and double delete email warnings.  The government must show that independent action was not likely.  John Sargeant’s statement that he made his decision alone in his basement on the treadmill is an argument that Macmillan’s pricing decisions were independent of any other publishers.

Where windowing becomes important.

  • Months before announcing that they would experiment with Windowing certain titles, certain Publishers shared information among one another about which titles they would Window and their anticipated delay period for e-book publication.”
  • Carolyn Reidy shared information “confidentially” to another publisher of S&S’s plan to window Stephen King’s Under the Dome.  The executive shared this with his boss via email.  ”At the conclusion of the e-mail, the executive urges his boss to ‘double delete’ this e-mail from his files.”
  • Carolyn Reidy emails Les Moonves, CEO of S&S’s parent corporation CBS, regarding windowing and the need to “‘gather more troops’ and ammunition first.”
  • “[T]he Conspiring Publishers considering Windowing referenced themselves in one email as “the Club!”

Explanation of the Settlement.

  • 3 of the big 6 publishers will make new agreements with Amazon and the other retailers.
  • These new agreements can have staggered termination dates.  This means Hachette’s annual contract with Amazon would end on a different date than HarperCollins contract with Amazon.  This is to ensure that there is no concerted and collusive action.
  • The publishers can consider joint ventures (aka Bookish) but only upon approval of such a plan by the DOJ.
  • The publishers will need to provide DOJ a copy of their agreements with retailers for the next five years on a quarterly basis.
  • For two years, the publishers cannot restrict the right of retailers to discount books.  After two years, publishers can ask for and receive agreement to sell ebooks through a retailer under the current scheme – where the publishers restrict retailers from discounting.
  • For five years, the publishers cannot include MFN clauses in their agreements.
  • The publishers are allowed to negotiate a soft floor under which books cannot be discounted but only if the retailer agrees to this.  The clause in the settlement agreement allows a retailer, like Amazon, to discount books but limits the discount in one year for one publisher to not exceed the retailers aggregate commission.  Assume Amazon signs an agreement with Hachette and Amazon agrees to accept a 30% commission on every book sold.  For one year, the total amount of discounts cannot exceed the total commission Amazon received for that year.  Some of the books could be half off, buy one get one free, or not be discounted at all.  But the total discount cannot exceed total commission.  Assume Amazon sold 100 books for Hachette that were retail priced at $9.99.  The total commission for Amazon would be $299.70.  Thus, the overall discounts Amazon gave to us readers could not exceed $299.70.
  • Retailers like All Romance, Fictionwise, Kobo will be able to provide coupons and include a greater number of books into their rewards programs for at least a period of two years.

Analysis of BN’s objections to the settlement.

What Barnes and Noble did, instead, was argue four essential points.

  1. The settlement engages in unprecedented governmental influence into a previously unregulated business.  ” The proposed settlement, particularly its overreaching regulatory provisions, warrants an exacting review because of its potential impact on the national economy and culture, including the future of copyrighted expression and bookselling in general, not only electronic books (“e-books”). “
  2. The lifeblood of brick and mortar stores is predicated on publishers being able to price ebooks at the level the publisher deems fit.
  3. Prices are actually coming down and not up.
  4. Consumers will have less choice.

How Agency Pricing helped BN gain a foothold in ebooks.

It’s capital investment to remake itself into a technological company is costly.  Despite record sales at the end of the fiscal year 2010 (ending April 2011), it also suffered net loss of $74 million due to nook R&D.  The 4 year trend doesn’t look good in terms of net results.  However, the sales at have gone from  $466 million in 2008 to $858 million in 2010.  Now sales are nearly a 1/3 of its overall revenue, matching that of the revenue pulled in by its retail stores.

The suppression of Amazon’s ability to use ebooks as a loss leader allowed B&N to enter the market in late 2009 and capitalize on Agency pricing. B&N did not have to compete on price of ebooks, a move that would have undoubtedly increased its losses exponentially.  Instead, B&N focused on providing the emerging ebook market with a touch screen color ereader. Amazon will meet that this year, but B&N has gained a strong market share while Amazon was satisfied with its eink offerings.

Why the DOJ isn’t likely to agree to any suit that allows MFNs

So what if the publishers are permitted to agency price?  What no one explicitly states is that publishers must get the retailers to accept this deal: Agency with no MFN. Why would Amazon agree to this? Publishers would be able to price a book lower at Barnes & Noble yet higher at Amazon.  It would be able to provide deals at Apple, Kobo, Barnes & Noble, and every other retailer except for Amazon and Amazon would be hamstrung by the Agency pricing deal.  The converse is also true.  Amazon has a Kindle Daily Deal wherein it prices a book for $1.99.  Yesterday it was a Random House book.  A few days ago it was a Penguin book. Both houses are Agency houses but because of the MFN, that price was matched at Barnes & Noble.   Barnes & Noble also has a daily special and Amazon price matches it every time.

Feldman argues here that what Boies, Teicher, et al are arguing for is Agency pricing with an industry wide, unspoken MFN.  That essentially these entities are arguing for no price competition.

Penguin had filed a motion to stay (halt) any proceedings against them in civil court arguing that the arbitration clauses in the nook and Kindle agreements applied to Penguin as well because Amazon and BN were agents of Penguin.  The arbitration clauses of the nook and Kindle expressly forbid class actions and direct claims to arbitration.

The settling parties are trying to get every state and U.S. Territory to sign onto the settlement.

The Liaison States currently are working with the Attorneys General in forty-seven other states, the District of Columbia, and all the U.S. territories to obtain as many sign-ons as psosible and are working towards 100% participation.  The Settling Defendants expect the Liaison States will submit the proposed settlement to the Court for preliminary approval by August.

Denial of Penguin’s Motion to Stay and Arbitrate:

The court denied the motion based on two provisions.  One, an individual can’t waive right to pursue antitrust claims in civil court.  Two, the class action plaintiffs showed the court that they would not be able to “effectively vindicat[e] their federal statutory rights” in arbitration. The plaintiffs satisfied the court that individual arbitration cases would be prohibitive for one consumer to bring.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She self publishes NA and contemporaries (and publishes with Berkley and Montlake) and spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com


  1. library addict
    Jul 01, 2012 @ 23:34:39

    Thanks so much for this, Jane.

  2. PatF
    Jul 02, 2012 @ 07:28:41

    Perhaps it has been defined here before, but could you please explain “windowing” for me? Thanks!

  3. DavidW
    Jul 03, 2012 @ 07:52:36

    Fantastic, indepth article!

    @PatF: windowing is when a publisher intentionally delays the ebook publication to protect hardcover revenue.

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