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Macmillan, Penguin fire back at U.S. Department of Justice

Two of the publishers named in a U.S. antitrust lawsuit alleging illegal price fixing of ebooks have shot back at the Department of Justice in affidavits filed last week in New York.

In an affidavit filed last Wednesday, Macmillan states that it adopted the agency model “independently” in an attempt to counter “Amazon’s monopolization of eBook distribution.” The affidavit states that there was no conspiracy to fix prices at all:

Macmillan independently adopted an agency model for eBook distribution solely as a result of bilateral negotiations between Macmillan and Apple. Apple proposed to distribute Macmillan’s eBooks (on a device that came to be known as the iPad) only on the basis that Apple would serve as Macmillan’s sales agent in exchange for receiving commissions on each sale. Apple had previously used the agency model in its iTunes App Store, and Macmillan uses the agency model in its distribution of the print books of other publishers. Apple provided these terms to Macmillan on a “take it or leave it” basis.

Penguin, meanwhile, uses its filing to lay out the case against Amazon as anticompetitive in the ebook market:

Penguin admits that it viewed some of Amazon’s business practices, most especially its practice of sometimes selling new release eBooks and eBooks versions of New York Times bestselling titles well below the prices paid by Amazon to Penguin for these eBook titles, as anticompetitive and detrimental to the long term process of expanding opportunities for developing authors and creating more content.

An article in the Guardian quotes the affidavits as also responding to allegations that collusion occurred over the course of various upscale dinners in New York:

The government complaint said the move to the agency model followed meetings between chief executives in “private dining rooms of upscale Manhattan restaurants,” where “confidential business and competitive matters, including Amazon’s ebook’s retailing practices” were discussed.

Macmillan denied this. “For the record: Macmillan did not conspire with other publishers in New York City restaurants. Macmillan’s CEO, John Sargent, dined once or at most twice with peers from certain other publishing houses, but these dinners were social in nature,” its response says. “No conspiracy was hatched over any such dinner.”

While Penguin chief executive John Makinson did attend certain dinners, these were social events, said the publisher. Penguin’s submission added that “while, in addition to purely social matters, general book industry issues and trends were discussed at high-levels of generality, including the growth of ebooks and Amazon’s role therein, Makinson did so pursuant to antitrust legal advice and avoided competitively sensitive topics like terms of trade, prices, or confidential competitive matters.”