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Friday, February 08, 2013, 08:53 am PT (11:53 am ET)

Apple is lone holdout in DOJ e-book pricing case after Macmillan settles

Book publisher Macmillan has settled with the U.S. Department of Justice to avoid an e-book price fixing investigation, leaving Apple as the only company that has not yet reached an out-of-court settlement.

Macmillan's settlement means that book retailers, including Amazon, will be able to discount digital titles of all major publishers, according to The Wall Street Journal. Macmillan joins settlements already made by Penguin, Hachette, HarperCollins, and Simon & Schuster.

Book publishers

Late Apple cofounder Steve Jobs introduces iBooks iPad app and partner publishers in 2010. | Source: Apple


Those publishers, along with Apple, were accused of collusion in raising e-book prices. Apple offered publishers the ability to set their own prices on its iBookstore through the so-called "agency model."

That was a change from Amazon's low-margin wholesale model, which lets retailers buy content in bulk and sell it at or below cost. Apple and publishers favored the agency model because it gave the publishers the ability to set their own prices and control what an e-book should cost.

However, the end result of that was higher prices for e-books for consumers. That led the DOJ to move forward with litigation for "conspiring to raise e-book prices."

Following Macmillan's settlement, Apple stands alone against the DOJ's allegations. The iPad maker has denied the charges, but has not signaled whether it plans to settle.

Friday's settlement requires Macmillan to allow e-book retailers to begin discounting titles within three business days. John Sargent, Macmillan's chief executive, said his company settled "Because the penalties became too high to risk even the possibility of an unfavorable outcome," though he still contends that his company did not actually do anything wrong.