Vol. 78 Monday, No. 37 February 25, 2013 Part III Department of Justice Antitrust Division United States v. Apple, Inc., Hachette Book Group, Inc., Harpercollins Publishers L.L.C., Verlagsgruppe Georg Von Holtzbrinck GMBH, Holtzbrinck Publishers, LLC d/b/a Macmillan, The Penguin Group, A Division of Pearson PLC, Penguin Group (USA), Inc., and Simon & Schuster, Inc.; Proposed Final Judgment and Competitive Impact Statement; Notice VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 12874 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices DEPARTMENT OF JUSTICE Division upon request and payment of delivery, easier portability and storage, the copying fee set by Department of and adjustable font size. E-books also Antitrust Division Justice regulations. are considerably cheaper to produce and Public comment on the proposed distribute than physical (or ‘‘print’’) United States v. Apple, Inc., Hachette Final Judgment as to Macmillan is books. Book Group, Inc., Harpercollins invited within 60 days of the date of this 2. E-book sales have been increasing Publishers L.L.C., Verlagsgruppe notice. Such comments will be filed rapidly ever since Amazon released its Georg Von Holtzbrinck GMBH, with the Court and will either be first Kindle device in November of 2007. Holtzbrinck Publishers, LLC d/b/a published in the Federal Register or, In developing and then mass marketing Macmillan, The Penguin Group, A with the permission of the Court, be its Kindle e-reader and associated e- Division of Pearson PLC, Penguin posted electronically on the Department book content, Amazon substantially Group (USA), Inc., and Simon & of Justice’s Web site. Comments should increased the retail market for e-books. Schuster, Inc.; Proposed Final be directed to John R. Read, Chief, One of Amazon’s most successful Judgment and Competitive Impact Litigation III Section, Antitrust Division, marketing strategies was to lower Statement Department of Justice, 450 Fifth Street substantially the price of newly released NW., Suite 4000, Washington, DC 20530 and bestselling e-books to $9.99. Notice is hereby given pursuant to the (telephone: 202–307–0468). 3. Publishers saw the rise in e-books, Antitrust Procedures and Penalties Act, and particularly Amazon’s price 15 U.S.C. 16(b)–(h), that a proposed Patricia A. Brink, discounting, as a substantial challenge Final Judgment, Stipulation, and Director of Civil Enforcement. to their traditional business model. The Competitive Impact Statement have Publisher Defendants feared that lower been filed with the United States United States District Court for the Southern District of New York retail prices for e-books might lead District Court for the Southern District eventually to lower wholesale prices for of New York in United States of United States of America, Plaintiff, v. e-books, lower prices for print books, or America v. Apple, Inc. et al., Civil Apple, Inc., Hachette Book Group, Inc., other consequences the publishers Action No. 12–CV–2826. On April 11, Harpercollins Publishers L.L.C., hoped to avoid. Each Publisher 2012, the United States filed a Verlagsgruppe Georg Von Holtzbrinck Gmbh, Defendant desired higher retail e-book Complaint alleging that the defendants Holtzbrinck Publishers, LLC D/B/A Macmillan, The Penguin Group, A Division prices across the industry before agreed to raise the retail price of e- ‘‘$9.99’’ became an entrenched books, in violation of Section 1 of the of Pearson Plc, Penguin Group (USA), Inc., and Simon & Schuster, Inc., Defendants. consumer expectation. By the end of Sherman Act, 15 U.S.C. 1. On February Civil Action No. 12–CV–2826. 2009, however, the Publisher 8, 2013, the United States filed a Defendants had concluded that proposed Final Judgment as to Complaint unilateral efforts to move Amazon away defendants Verlagsgruppe Georg von The United States of America, acting from its practice of offering low retail Holtzbrinck GmbH and Holtzbrinck under the direction of the Attorney prices would not work, and they Publishers, LLC d/b/a Macmillan General of the United States, brings this thereafter conspired to raise retail e- (collectively, ‘‘Macmillan’’) to return civil antitrust action against Defendants book prices and to otherwise limit pricing discretion to e-book retailers and Apple, Inc. (‘‘Apple’’); Hachette Book competition in the sale of e-books. To comply with other obligations designed Group, Inc. (‘‘Hachette’’); HarperCollins effectuate their conspiracy, the to end the anticompetitive effects of the Publishers L.L.C. (‘‘HarperCollins’’); Publisher Defendants teamed up with conspiracy. Previously, on September 6, Verlagsgruppe Georg von Holtzbrinck Defendant Apple, which shared the 2012, a Final Judgment as to defendants GmbH and Holtzbrinck Publishers, LLC same goal of restraining retail price Hachette Book Group, Inc., d/b/a Macmillan (collectively, competition in the sale of e-books. HarperCollins Publishers L.L.C., and ‘‘Macmillan’’); The Penguin Group, a 4. The Defendants’ conspiracy to limit Simon & Schuster, Inc. was entered by division of Pearson plc and Penguin e-book price competition came together the United States District Court for the Group (USA), Inc. (collectively, as the Publisher Defendants were jointly Southern District of New York. On ‘‘Penguin’’); and Simon & Schuster, Inc. devising schemes to limit Amazon’s December 18, 2012, the United States (‘‘Simon & Schuster’’; collectively with ability to discount e-books and filed a proposed Final Judgment as to Hachette, HarperCollins, Macmillan, Defendant Apple was preparing to defendants Penguin Group (USA), Inc. and Penguin, ‘‘Publisher Defendants’’) launch its electronic tablet, the iPad, and The Penguin Group, a division of to obtain equitable relief to prevent and and considering whether it should sell Pearson plc; that proposed Final remedy violations of Section 1 of the e-books that could be read on the new Judgment is currently subject to a public Sherman Act, 15 U.S.C. 1. device. Apple had long believed it comment period that expires on March Plaintiff alleges: would be able to ‘‘trounce Amazon by 5, 2013. opening up [its] own ebook store,’’ but Copies of the Complaint, proposed I. Introduction the intense price competition that Final Judgment as to Macmillan, and 1. Technology has brought prevailed among e-book retailers in late Competitive Impact Statement are revolutionary change to the business of 2009 had driven the retail price of available for inspection at the publishing and selling books, including popular e-books to $9.99 and had Department of Justice, Antitrust the dramatic explosion in sales of ‘‘e- reduced retailer margins on e-books to Division, Antitrust Documents Group, books’’—that is, books sold to levels that Apple found unattractive. As 450 Fifth Street NW., DC 20530 Suite consumers in electronic form and read a result of discussions with the 1010 (telephone: 202–514–2481), on the on a variety of electronic devices, Publisher Defendants, Apple learned Department of Justice’s Web site at including dedicated e-readers (such as that the Publisher Defendants shared a http://www.justice.gov/atr, and at the the Kindle or the Nook), multipurpose common objective with Apple to limit e- Office of the Clerk of the United States tablets, smartphones and personal book retail price competition, and that District Court for the Southern District computers. Consumers reap a variety of the Publisher Defendants also desired to of New York. Copies of these materials benefits from e-books, including 24- have popular e-book retail prices may be obtained from the Antitrust hour access to product with near-instant stabilize at levels significantly higher VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12875 than $9.99. Together, Apple and the into a functionally identical agency Cupertino, CA 95014. Among many Publisher Defendants reached an contract with Apple that would go into other businesses, Apple, Inc. distributes agreement whereby retail price effect simultaneously in April 2010 and e-books through its iBookstore. competition would cease (which all the ‘‘chang[e] the industry permanently.’’ 13. Hachette Book Group, Inc. has its conspirators desired), retail e-book These ‘‘Apple Agency Agreements’’ principal place of business at 237 Park prices would increase significantly conferred on the Publisher Defendants Avenue, New York, NY 10017. It (which the Publisher Defendants the power to set Apple’s retail prices for publishes e-books and print books desired), and Apple would be e-books, while granting Apple the through publishers such as Little, guaranteed a 30 percent ‘‘commission’’ assurance that the Publisher Defendants Brown, and Company and Grand on each e-book it sold (which Apple would raise retail e-book prices at all Central Publishing. desired). other e-book outlets, too. Instead of 14. HarperCollins Publishers L.L.C. 5. To accomplish the goal of raising e- $9.99, electronic versions of bestsellers has its principal place of business at 10 book prices and otherwise limiting retail and newly released titles would be E. 53rd Street, New York, NY 10022. It competition for e-books, Apple and the priced according to a set of price tiers publishes e-books and print books Publisher Defendants jointly agreed to contained in each of the Apple Agency through publishers such as Harper and alter the business model governing the Agreements that determined de facto William Morrow. relationship between publishers and retail e-book prices as a function of the 15. Holtzbrinck Publishers, LLC d/b/ retailers. Prior to the conspiracy, both title’s hardcover list price. All a Macmillan has its principal place of print books and e-books were sold bestselling and newly released titles business at 175 Fifth Avenue, New under the longstanding ‘‘wholesale bearing a hardcover list price between York, NY 10010.