Lawsuit May Force Apple to Pay Millions Over e-Book Pricing Scheme

Hagens Berman, a consumer rights class-action law firm, today announced it has filed a nationwide class-action lawsuit in the U.S. District Court for the Northern District of California, claiming that Apple Inc. and five of the top U.S. publishers illegally fix prices of e-books.

In addition to Apple, other parties targeted by the Hagens Berman suit include HarperCollins Publishers, a subsidiary of News Corporation, Hachette Book Group, Macmillan Publishers, Penguin Group Inc., a subsidiary of Pearson PLC, and Simon & Schuster Inc., a subsidiary of CBS.

The suit alleges that the publishers and Apple conspired to increase prices for popular e-book titles to boost profits, as well as to force e-book rivals to abandon their discount pricing regarded as “pro-consumer”.

Amazon is one of those rivals. Earlier this week, the online retailer announced a web-based version of its former iPad application Kindle, that allows customers to browse for, preview, and buy electronic books.

The suit specifically notes that said publishers are Apple’s partners in crime because they “believed that Amazon’s wildly popular Kindle e-reader device and the company’s discounted pricing for e-books would increase the adoption of e-books, and feared Amazon’s discounted pricing structure would permanently set consumer expectations for lower prices, even for other e-reader devices.”

“Fortunately for the publishers, they had a co-conspirator as terrified as they were over Amazon’s popularity and pricing structure, and that was Apple,” said Steve Berman, attorney representing consumers and founding partner of Hagen Berman.

“We intend to prove that Apple needed a way to neutralize Amazon’s Kindle before its popularity could challenge the upcoming introduction of the iPad, a device Apple intended to compete as an e-reader,” Berman added.

The lawyer believes Apple went the easy way and “decided to choke off competition through this anti-consumer scheme,” instead of finding a way to compete with Amazon fairly.

According to Berman, their suit seeks damages that could total tens of millions of dollars.