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. It publishes e-books model.’’ Under this model, publishers $25.01 and $35.00, for example, would and print books through publishers such sold books to retailers, and retailers, as be priced at $12.99, $14.99, or $16.99, as Farrar, Straus and Giroux and St. the owners of the books, had the with the retail e-book price increasing in Martin’s Press. Verlagsgruppe Georg von freedom to establish retail prices. relation to the hardcover list price. Holtzbrinck GmbH owns Holtzbrinck Defendants were determined to end the 8. After executing the Apple Agency Publishers, LLC d/b/a Macmillan and robust retail price competition in e- Agreements, the Publisher Defendants has its principal place of business at books that prevailed, to the benefit of all then quickly acted to complete the Ga¨nsheidestra+e 26, Stuttgart 70184, consumers, under the wholesale model. scheme by imposing agency agreements Germany. They therefore agreed jointly to replace on all their other retailers. As a direct 16. Penguin Group (USA), Inc. has its the wholesale model for selling e-books result, those retailers lost their ability to principal place of business at 375 with an ‘‘agency model.’’ Under the compete on price, including their ability Hudson Street, New York, NY 10014. It agency model, publishers would take to sell the most popular e-books for publishes e-books and print books control of retail pricing by appointing $9.99 or for other low prices. Once in through publishers such as The Viking retailers as ‘‘agents’’ who would have no control of retail prices, the Publisher Press and Gotham Books. Penguin power to alter the retail prices set by the Defendants limited retail price Group (USA), Inc. is the United States publishers. As a result, the publishers competition among themselves. affiliate of The Penguin Group, a could end price competition among Millions of e-books that would have division of Pearson plc, which has its retailers and raise the prices consumers sold at retail for $9.99 or for other low principal place of business at 80 Strand, pay for e-books through the adoption of prices instead sold for the prices London WC2R 0RL, United Kingdom. identical pricing tiers. This change in indicated by the price schedules 17. Simon & Schuster, Inc. has its business model would not have included in the Apple Agency principal place of business at 1230 occurred without the conspiracy among Agreements—generally, $12.99 or Avenue of the Americas, New York, NY the Defendants. $14.99. Other price and non-price 10020. It publishes e-books and print 6. Apple facilitated the Publisher competition among e-book publishers books through publishers such as Free Defendants’ collective effort to end and among e-book retailers also was Press and Touchstone. retail price competition by coordinating unlawfully eliminated to the detriment their transition to an agency model III. Jurisdiction, Venue, and Interstate of U.S. consumers. Commerce across all retailers. Apple clearly 9. The purpose of this lawsuit is to understood that its participation in this enjoin the Publisher Defendants and 18. Plaintiff United States of America scheme would result in higher prices to Apple from further violations of the brings this action pursuant to Section 4 consumers. As Apple CEO Steve Jobs nation’s antitrust laws and to restore the of the Sherman Act, 15 U.S.C. 4, to described his company’s strategy for competition that has been lost due to obtain equitable relief and other relief to negotiating with the Publisher the Publisher Defendants’ and Apple’s prevent and restrain Defendants’ Defendants, ‘‘We’ll go to [an] agency illegal acts. violations of Section 1 of the Sherman model, where you set the price, and we 10. Defendants’ ongoing conspiracy Act, 15 U.S.C 1. get our 30%, and yes, the customer pays and agreement have caused e-book 19. This Court has subject matter a little more, but that’s what you want consumers to pay tens of millions of jurisdiction over this action under anyway.’’ Apple was perfectly willing to dollars more for e-books than they Section 4 of the Sherman Act, 15 U.S.C. help the Publisher Defendants obtain otherwise would have paid. 4, and 28 U.S.C. 1331, 1337(a), and their objective of higher prices for 11. The United States, through this 1345. consumers by ending Amazon’s ‘‘$9.99’’ suit, asks this Court to declare 20. This Court has personal price program as long as Apple was Defendants’ conduct illegal and to enter jurisdiction over each Defendant and guaranteed its 30 percent margin and injunctive relief to prevent further venue is proper in the Southern District could avoid retail price competition injury to consumers in the United of New York under Section 12 of the from Amazon. States. Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 7. The plan—what Apple proudly 1391, because each Defendant transacts described as an ‘‘aikido move’’— II. Defendants business and is found within the worked. Over three days in January 12. Apple, Inc. has its principal place Southern District of New York. The U.S. 2010, each Publisher Defendant entered of business at 1 Infinite Loop, component of each Publisher Defendant

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 12876 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

is headquartered in the Southern warehousing expenses, distribution 31. To compete with Amazon, other e- District of New York, and acts in expenses, and costs of dealing with book retailers often matched or furtherance of the conspiracy occurred unsold stock. approached Amazon’s $9.99-or-less in this District. Many thousands of the 26. Consumers purchase e-books prices for e-book versions of new Publisher Defendants’ e-books are and through Web sites of e-book retailers or releases and New York Times have been sold in this District, through applications loaded onto their bestsellers. As a result of that including through Defendant Apple’s reading devices. Such electronic competition, consumers benefited from iBookstore. distribution allows e-book retailers to Amazon’s $9.99-or-less e-book prices 21. Defendants are engaged in, and avoid certain expenses they incur when even if they purchased e-books from their activities substantially affect, they sell print books, including most competing e-book retailers. warehousing expenses and distribution interstate trade and commerce. The 32. The Publisher Defendants feared Publisher Defendants sell e-books expenses. 27. From its very small base in 2007 that $9.99 would become the standard throughout the United States. Their e- price for newly released and bestselling books represent a substantial amount of at the time of Amazon’s Kindle launch, the e-book market has exploded, e-books. For example, one Publisher interstate commerce. In 2010, United Defendant’s CEO bemoaned the States consumers paid more than $300 registering triple-digit sales growth each ‘‘wretched $9.99 price point’’ and million for the Publisher Defendants’ e- year. E-books now constitute at least ten Penguin USA CEO David Shanks books, including more than $40 million percent of general interest fiction and worried that e-book pricing ‘‘can’t be for e-books licensed through Defendant non-fiction books (commonly known as $9.99 for hardcovers.’’ Apple’s iBookstore. ‘‘trade’’ books 1) sold in the United States and are widely predicted to reach 33. The Publisher Defendants IV. Co-Conspirators at least 25 percent of U.S. trade books believed the low prices for newly 22. Various persons, who are known sales within two to three years. released and bestselling e-books were disrupting the industry. The Amazon- and unknown to Plaintiff, and not D. Publisher Defendants and ‘‘The $9.99 named as defendants in this action, Problem’’ led $9.99 retail price point for the most including senior executives of the popular e-books troubled the Publisher Publisher Defendants and Apple, have 28. The Publisher Defendants Defendants because, at $9.99, most of participated as co-conspirators with compete against each other for sales of these e-book titles were priced Defendants in the offense alleged and trade e-books to consumers. Publishers substantially lower than hardcover have performed acts and made bid against one another for print- and versions of the same title. The Publisher statements in furtherance of the electronic-publishing rights to content Defendants were concerned these lower conspiracy. that they expect will be most successful e-book prices would lead to the in the market. They also compete ‘‘deflation’’ of hardcover book prices, V. The Publishing Industry and against each other in bringing those with accompanying declining revenues Background of the Conspiracy books to market. For example, in for publishers. The Publisher A. Print Books addition to price-setting, they create Defendants also worried that if $9.99 cover art and other on-book sales 23. Authors submit books to solidified as the consumers’ expected inducements, and also engage in retail price for e-books, Amazon and publishers in manuscript form. advertising campaigns for some titles. Publishers edit manuscripts, print and other retailers would demand that 29. The Publisher Defendants are five publishers lower their wholesale prices, bind books, provide advertising and of the six largest publishers of trade related marketing services, decide when further compressing publisher profit books in the United States. They margins. a book should be released for sale, and publish the vast majority of their newly distribute books to wholesalers and released titles as both print books and 34. The Publisher Defendants also retailers. Publishers also determine the e-books. Publisher Defendants compete feared that the $9.99 price point would cover price or ‘‘list price’’ of a book, and against each other in the sales of both make e-books so popular that digital typically that price appears on the trade print books and trade e-books. publishers could achieve sufficient scale book’s cover. 30. When Amazon launched its to challenge the major incumbent 24. Retailers purchase print books Kindle device, it offered newly released publishers’ basic business model. The directly from publishers, or through and bestselling e-books to consumers for Publisher Defendants were especially wholesale distributors, and resell them $9.99. At that time, Publisher concerned that Amazon was well to consumers. Retailers typically Defendants routinely wholesaled those positioned to enter the digital purchase print books under the e-books for about that same price, which publishing business and thereby ‘‘wholesale model.’’ Under that model, typically was less than the wholesale supplant publishers as intermediaries retailers pay publishers approximately price of the hardcover versions of the between authors and consumers. one-half of the list price of books, take same titles, reflecting publisher cost Amazon had, in fact, taken steps to do ownership of the books, then resell savings associated with the electronic so, contracting directly with authors to them to consumers at prices of the format. From the time of its launch, publish their works as e-books—at a retailer’s choice. Publishers have sold Amazon’s e-book distribution business higher royalty rate than the Publisher print books to retailers through the has been consistently profitable, even Defendants offered. Amazon’s move wholesale model for over 100 years and when substantially discounting some threatened the Publisher Defendants’ continue to do so today. newly released and bestselling titles. traditional positions as the gate-keepers of the publishing world. The Publisher B. E-books 1 Non-trade e-books include electronic versions of Defendants also feared that other 25. E-books are books published in children’s picture books and academic textbooks, competitive advantages they held as a electronic formats. E-book publishers reference materials, and other specialized texts that result of years of investments in their typically are published by separate imprints from print book businesses would erode and, avoid some of the expenses incurred in trade books, often are sold through separate producing and distributing print books, channels, and are not reasonably substitutable for eventually, become irrelevant, as e-book including most manufacturing expenses, trade e-books. sales continued to grow.

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00004 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 12877

E. Publisher Defendants Recognize They 38. The evidence showing conspiracy Agency Agreements simultaneously Cannot Solve ‘‘The $9.99 Problem’’ is substantial and includes: became effective, all Publisher Alone • Practices facilitating a horizontal Defendants immediately used their new conspiracy. The Publisher Defendants retail pricing authority to raise the retail 35. Each Publisher Defendant knew regularly communicated with each other prices of their newly released and that, acting alone, it could not compel in private conversations, both in person bestselling e-books to the common Amazon to raise e-book prices and that and on the telephone, and in emails to ostensible maximum prices contained in it was not in its economic self-interest each other to exchange sensitive their Apple Agency Agreements. to attempt unilaterally to raise retail e- information and assurances of solidarity book prices. Each Publisher Defendant to advance the ends of the conspiracy. A. The Publisher Defendants Recognize relied on Amazon to market and • Direct evidence of a conspiracy. a Common Threat distribute its e-books, and each The Publisher Defendants directly 39. Starting no later than September Publisher Defendant believed Amazon discussed, agreed to, and encouraged of 2008 and continuing for at least one would leverage its position as a large each other to collective action to force year, the Publisher Defendants’ CEOs (at retailer to preserve its ability to compete Amazon to raise its retail e-book prices. times joined by one non-defendant and would resist any individual • Recognition of illicit nature of publisher’s CEO) met privately as a publisher’s attempt to raise the prices at communications. Publisher Defendants group approximately once per quarter. which Amazon sold that publisher’s e- took steps to conceal their These meetings took place in private books. As one Publisher Defendant communications with one another, dining rooms of upscale Manhattan executive acknowledged Amazon’s including instructions to ‘‘double restaurants and were used to discuss bargaining strength, ‘‘we’ve always delete’’ email and taking other measures confidential business and competitive known that unless other publishers to avoid leaving a paper trail. matters, including Amazon’s e-book follow us, there’s no chance of success • Acts contrary to economic interests. retailing practices. No legal counsel was in getting Amazon to change its pricing It would have been contrary to the present at any of these meetings. practices.’’ In the same email, the economic interests of any Publisher 40. In September 2008, Penguin executive wrote, ‘‘without a critical Defendant acting alone to attempt to Group CEO John Makinson was joined mass behind us Amazon won’t impose agency on all of its retailers and by Macmillan CEO John Sargent and the ‘negotiate,’ so we need to be more then raise its retail e-book prices. For CEOs of the other four large publishers confident of how our fellow publishers example, Penguin Group CEO John at a dinner meeting in ‘‘The Chef’s Wine will react * * * .’’ Makinson reported to his parent Cellar,’’ a private room at Picholene. company board of directors that ‘‘the One of the CEOs reported that business 36. Each Publisher Defendant also industry needs to develop a common matters were discussed. recognized that it would lose sales if strategy’’ to address the threat ‘‘from 41. In January 2009, the CEO of one retail prices increased for only its e- digital companies whose objective may Publisher Defendant, a United States books while the other Publisher be to disintermediate traditional subsidiary of a European corporation, Defendants’ e-books remained publishers altogether’’ because it ‘‘will promised his corporate superior, the competitively priced. In addition, not be possible for any individual CEO of the parent company, that he higher prices for just one publisher’s e- publisher to mount an effective would raise the future of e-books and books would not change consumer response,’’ and Penguin later admitted Amazon’s potential role in that future at perceptions enough to slow the erosion that it would have been economically an upcoming meeting of publisher of consumer-perceived value of books disadvantaged if it ‘‘was the only CEOs. Later that month, at a dinner that all the Publisher Defendants feared publisher dealing with Apple under the meeting hosted by Penguin Group CEO would result from Amazon’s $9.99 new business model.’’ John Makinson, again in ‘‘The Chef’s pricing policy. • Motive to enter the conspiracy, Wine Cellar’’ at Picholene, the same VI. Defendants’ Unlawful Activities including knowledge or assurances that group of publisher CEOs met once more. competitors also will enter. The 42. On or about June 16, 2009, Mr. 37. Beginning no later than September Publisher Defendants were motivated by Makinson again met privately with 2008, the Publisher Defendants’ senior a desire to maintain both the perceived other Publisher Defendant CEOs and executives engaged in a series of value of their books and their own discussed, inter alia, the growth of e- meetings, telephone conversations and position in the industry. They received books and Amazon’s role in that growth. other communications in which they assurances from both each other and 43. On or about September 10, 2009, jointly acknowledged to each other the Apple that they all would move together Mr. Makinson once again met privately threat posed by Amazon’s pricing to raise retail e-book prices. Apple was with other Publisher Defendant CEOs strategy and the need to work motivated to ensure that it would not and the CEO of one non-defendant collectively to end that strategy. By the face competition from Amazon’s low- publisher in a private room of a end of the summer of 2009, the price retail strategy. different Manhattan restaurant, Alto. Publisher Defendants had agreed to act • Abrupt, contemporaneous shift They discussed the growth of e-books collectively to force up Amazon’s retail from past behavior. Prior to January 23, and complained about Amazon’s role in prices and thereafter considered and 2010, all Publisher Defendants sold that growth. implemented various means to their e-books under the traditional 44. In addition to the CEO dinner accomplish that goal, including moving wholesale model; by January 25, 2010, meetings, Publisher Defendants’ CEOs under the guise of a joint venture. all Publisher Defendants had and other executives met in-person, Ultimately, in late 2009, Apple and the irrevocably committed to transition all one-on-one to communicate about e- Publisher Defendants settled on the of their retailers to the agency model books multiple times over the course of strategy that worked—replacing the (and Apple had committed to sell e- 2009 and into 2010. Similar meetings wholesale model with an agency model books on a model inconsistent with the took place in Europe, including that gave the Publisher Defendants the way it sells the vast bulk of the digital meetings in the fall of 2009 between power to raise retail e-book prices media it offers in its iTunes store). On executives of Macmillan parent themselves. April 3, 2010, as soon as the Apple company Verlagsgruppe Georg von

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 12878 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

Holtzbrinck GmbH and executives of response, because of both the resources lead in working with Apple to capitalize another Publisher Defendant’s parent necessary and the risk of retribution, so the on this golden opportunity for the company. Macmillan CEO John Sargent industry needs to develop a common Publisher Defendants to achieve their joined at least one of these parent strategy. This is the context for the goal of raising and stabilizing retail e- development of the Project Z initiatives [joint book prices above $9.99 by collectively company meetings. ventures] in London and New York. 45. These private meetings provided imposing the agency model on the the Publisher Defendants’ CEOs the C. Defendants Agree To Increase and industry. opportunity to discuss how they Stabilize Retail E-Book Prices by 54. It appears that Hachette and collectively could solve ‘‘the $9.99 Collectively Adopting an Agency Model HarperCollins communicated with each problem.’’ 50. To raise e-book prices, the other about moving to an agency model Publisher Defendants also began to during the brief window between Mr. B. Publisher Defendants Conspire To Cue’s first telephone calls to the consider in late 2009 selling e-books Raise Retail E-book Prices Under the Publisher Defendants and his visit to under an ‘‘agency model’’ that would Guise of Joint Venture Discussions meet with their CEOs. On the morning take away Amazon’s ability to set low 46. While each Publisher Defendant of December 10, 2009, a HarperCollins retail prices. As one CEO of a Publisher recognized that it could not solve ‘‘the executive added to his calendar an Defendant’s parent company explained $9.99 problem’’ by itself, collectively appointment to call a Hachette in a December 6, 2009 email message, the Publisher Defendants accounted for executive at 10:50 a.m. At 11:01 a.m., ‘‘[o]ur goal is to force Amazon to return nearly half of Amazon’s e-book the Hachette executive returned the to acceptable sales prices through the revenues, and by refusing to compete phone call, and the two spoke for six establishment of agency contracts in the with one another for Amazon’s minutes. Then, less than a week later in USA. * * * To succeed our colleagues business, the Publisher Defendants New York, both Hachette and must know that we entered the fray and could force Amazon to accept the HarperCollins executives told Mr. Cue follow us.’’ (Translated from French). Publisher Defendants’ new contract in their initial meetings with him that 51. Apple’s entry into the e-book terms and to change its pricing they wanted to sell e-books under an business provided a perfect opportunity practices. agency model, a dramatic departure for collective action to implement the 47. The Publisher Defendants thus from the way books had been sold for agency model and use it to raise retail conspired to act collectively, initially in over a century. e-book prices. Apple was in the process the guise of joint ventures. These 55. The other Publisher Defendants of developing a strategy to sell e-books ostensible joint ventures were not meant also made clear to Apple that they on its new iPad device. Apple initially to enhance competition by bringing to ‘‘certainly’’ did not want to continue contemplated selling e-books through market products or services that the ‘‘the existing way that they were doing the existing wholesale model, which publishers could not offer unilaterally, business,’’ i.e., with Amazon promoting was similar to the manner in which but rather were designed as their most popular e-books for $9.99 Apple sold the vast majority of the anticompetitive measures to raise under a wholesale model. digital media it offered in its iTunes prices. 56. Apple saw a way to turn the 48. All five Publisher Defendants store. On February 19, 2009, Apple Vice agency scheme into a highly profitable agreed in 2009 at the latest to act President of Internet Services Eddy Cue model for itself. Apple determined to collectively to raise retail prices for the explained to Apple CEO Steve Jobs in give the Publisher Defendants what they most popular e-books above $9.99. One an email, ‘‘[a]t this point, it would be wanted while shielding itself from retail CEO of a Publisher Defendant’s parent very easy for us to compete and I think price competition and realizing margins company explained to his corporate trounce Amazon by opening up our own far in excess of what e-book retailers superior in a July 29, 2009 email ebook store.’’ In addition to considering then averaged on each newly released or message that ‘‘[i]n the USA and the UK, competitive entry at that time, though, bestselling e-book sold. Apple realized but also in Spain and France to a lesser Apple also contemplated illegally that, as a result of the scheme, ‘‘the degree, the ‘top publishers’ are in dividing the digital content world with customer’’ would ‘‘pay[] a little more.’’ discussions to create an alternative Amazon, allowing each to ‘‘own the 57. On December 16, 2009, the day platform to Amazon for e-books. The category’’ of its choice—audio/video to after both companies’ initial meetings goal is less to compete with Amazon as Apple and e-books to Amazon. with Apple, Penguin Group CEO John to force it to accept a price level higher 52. Apple soon concluded, though, Makinson had a breakfast meeting at a than 9.99. * * * I am in NY this week that competition from other retailers— London hotel with the CEO of another to promote these ideas and the especially Amazon—would prevent Publisher Defendant’s parent company. movement is positive with [the other Apple from earning its desired 30 Consistent with the Publisher four Publisher Defendants].’’ (Translated percent margins on e-book sales. Defendants’ other efforts to conceal their from French). Ultimately, Apple, together with the activities, Mr. Makinson’s breakfast 49. Less than a week later, in an Publisher Defendants, set in motion a companion wrote to his U.S. August 4, 2009 strategy memo for the plan that would compel all non-Apple subordinate that he would recount board of directors of Penguin’s ultimate e-book retailers also to sign onto agency portions of his discussion with Mr. parent company, Penguin Group CEO or else, as Apple’s CEO put it, the Makinson only by telephone. John Makinson conveyed the same Publisher Defendants all would say, 58. By the time Apple arrived for a message: ‘‘we’re not going to give you the books.’’ second round of meetings during the 53. The executive in charge of Apple’s week of December 21, 2009, the agency Competition for the attention of readers inchoate e-books business, Eddy Cue, model had become the focus of its will be most intense from digital companies telephoned each Publisher Defendant discussions with all of the Publisher whose objective may be to disintermediate traditional publishers altogether. This is not and Random House on or around Defendants. In these discussions, Apple a new threat but we do appear to be on a December 8, 2009 to schedule proposed that the Publisher Defendants collision course with Amazon, and possibly exploratory meetings in New York City require all retailers of their e-books to Google as well. It will not be possible for any on December 15 and December 16. accept the agency model. Apple thereby individual publisher to mount an effective Hachette and HarperCollins took the sought to ensure that it would not have

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00006 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 12879

to compete on retail prices. The particular means of collectively the MFN ensure Apple that the proposal appealed to the Publisher achieving that goal by all signing their Publisher Defendants would not set a Defendants because wresting pricing Apple Agency Agreement. higher retail price on the iBookstore control from Amazon and other e-book 62. Apple’s Mr. Cue emailed each than they set on other Web sites where retailers would advance their collusive Publisher Defendant between January 4, they controlled retail prices. Instead, the plan to raise retail e-book prices. 2010, and January 6, 2010 an outline of MFN here required each publisher to 59. The Publisher Defendants what he tabbed ‘‘the best approach for guarantee that it would lower the retail acknowledged to Apple their common e-books.’’ He reassured Penguin USA price of each e-book in Apple’s objective to end Amazon’s $9.99 CEO David Shanks and other Publisher iBookstore to match the lowest price pricing. As Mr. Cue reported in an email Defendant CEOs that Apple adopted the offered by any other retailer, even if the message to Apple’s CEO Steve Jobs, the approach ‘‘[a]fter talking to all the other Publisher Defendant did not control that three publishers with whom he had met publishers.’’ Mr. Cue sent substantively other retailer’s ultimate consumer price. saw the ‘‘plus’’ of Apple’s position as identical email messages and proposals That is, instead of an MFN designed to ‘‘solv[ing the] Amazon problem.’’ The to each Publisher Defendant. protect Apple’s ability to compete, this ‘‘negative’’ was that Apple’s proposed 63. The outlined proposal that Apple MFN was designed to protect Apple retail prices—topping out at $12.99 for circulated after consulting with each from having to compete on price at all, newly released and bestselling e- Publisher Defendant contained several while still maintaining Apple’s 30 books—were a ‘‘little less than [the key features. First, as Hachette and percent margin. publishers] would like.’’ Likewise, Mr. HarperCollins had initially suggested to 66. The purpose of these provisions Jobs later informed an executive of one Apple, the publisher would be the was to work in concert to enforce the of the Publisher Defendant’s corporate principal and Apple would be the agent Defendants’ agreement to raise and parents that ‘‘[a]ll major publishers’’ had for e-book sales. Consumer pricing stabilize retail e-book prices. Apple and told Apple that ‘‘Amazon’s $9.99 price authority would be transferred from the Publisher Defendants recognized for new releases is eroding the value retailers to publishers. Second, Apple’s that coupling Apple’s right to all of their perception of their products in proposal mandated that every other e-books with its right to demand that customer’s minds, and they do not want retailer of each publisher’s e-books— those e-books not be priced higher on this practice to continue for new Apple’s direct competitors—be forced to the iBookstore than on any other Web releases.’’ accept the agency model as well. As Mr. site effectively required that each 60. As perhaps the only company that Cue wrote, ‘‘all resellers of new titles Publisher Defendant take away retail could facilitate their goal of raising need to be in agency model.’’ Third, pricing control from all other e-book retail e-book prices across the industry, Apple would receive a 30 percent retailers, including stripping them of Apple knew that it had significant commission for each e-book sale. And any ability to discount or otherwise leverage in negotiations with Publisher fourth, each Publisher Defendant would price promote e-books out of the Defendants. Apple exercised this have identical pricing tiers for e-books retailer’s own margins. Otherwise, the leverage to demand a thirty percent sold through Apple’s iBookstore. retail price MFN would cause Apple’s commission—a margin significantly 64. On January 11, 2010, Apple iBookstore prices to drop to match the above the prevailing competitive emailed its proposed e-book distribution best available retail price of each e-book, margins for e-book retailers. The agreement to all the Publisher and the Publisher Defendants would Publisher Defendants worried that the Defendants. As with the outlined receive only 70 percent of those reduced combination of paying Apple a higher proposals Apple sent earlier in January, retail prices. Price competition by other commission than they would have liked the proposed e-book distribution retailers, if allowed to continue, thus and pricing their e-books lower than agreements were substantially the same. likely would reduce e-book revenues to they wanted might be too much to bear Also on January 11, 2010, Apple levels the Publisher Defendants could in exchange for Apple’s facilitation of separately emailed to Penguin and two not control or predict. their agreement to raise retail e-book other Publisher Defendants charts 67. In negotiating the retail price MFN prices. Ultimately, though, they showing how the Publisher Defendant’s with Apple, ‘‘some of [the Publisher convinced Apple to allow them to raise bestselling e-books would be priced at Defendants]’’ asserted that Apple did prices high enough to make the deal $12.99—the ostensibly maximum price not need the provision ‘‘because they palatable to them. under Apple’s then-current price tier would be moving to an agency model 61. As it negotiated with the Publisher proposal—in the iBookstore. with [the other e-book retailers,]’’ Defendants in December 2009 and 65. The proposed e-book distribution regardless. Ultimately, though, all January 2010, Apple kept each agreement mainly incorporated the Defendants agreed to include the MFN Publisher Defendant informed of the principles Apple set out in its email commitment mechanism. status of its negotiations with the other messages of January 4 through January 68. On January 16, 2010, Apple, via Publisher Defendants. Apple also 6, with two notable changes. First, Mr. Cue, offered revised terms to the assured the Publisher Defendants that Apple demanded that the Publisher Publisher Defendants that again were its proposals were the same to each and Defendants provide Apple their identical in substance. Apple modified that no deal Apple agreed to with one complete e-book catalogs and that they its earlier proposal in two significant publisher would be materially different not delay the electronic release of any ways. First, in response to publisher from any deal it agreed to with another title behind its print release. Second, requests, it added new maximum publisher. Apple thus knowingly served and more important, Apple replaced the pricing tiers that increased permissible as a critical conspiracy participant by express requirement that each publisher e-book prices to $16.99 or $19.99, allowing the Publisher Defendants to adopt the agency model with each of its depending on the book’s hardcover list signal to one another both (a) which retailers with an unusual most favored price. Second, Apple’s new proposal agency terms would comprise an nation (‘‘MFN’’) pricing provision. That mitigated these price increases acceptable means of achieving their provision was not structured like a somewhat by adding special pricing ultimate goal of raising and stabilizing standard MFN in favor of a retailer, tiers for e-book versions of books on the retail e-book prices, and (b) that they ensuring Apple that it would receive the New York Times fiction and non-fiction could lock themselves into this best available wholesale price. Nor did bestseller lists. For e-book versions of

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 12880 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

bestsellers bearing list prices of $30 or apart from signing the Apple Agency Apple’s progress in agency negotiations less, Publisher Defendants could set a Agreement: (i) accept the status quo with other publishers. Four minutes price up to $12.99; for bestsellers (‘‘Keep going with Amazon at $9.99’’); after that email was sent, the U.S. bearing list prices between $30 and $35, or (ii) continue with a losing policy of executive called another Publisher the e-book price cap would be $14.99. delaying the release of electronic Defendant’s CEO, and the two spoke for In conjunction with the revised versions of new titles (‘‘Hold back your over eleven minutes. proposal, Mr. Cue set up meetings for books from Amazon’’). According to • On January 22, 2010, at 9:30 a.m., the next week to finalize agreements Jobs, the Apple deal offered the Apple’s Cue met with one Publisher with the Publisher Defendants. Publisher Defendants a superior Defendant’s CEO to make what Cue 69. Each Publisher Defendant alternative path to the higher retail e- hoped would be a ‘‘final go/no-go required assurances that it would not be book prices they sought: ‘‘Throw in with decision’’ about whether the Publisher the only publisher to sign an agreement Apple and see if we can all make a go Defendant would sign an agreement with Apple that would compel it either of this to create a real mainstream e- with Apple. Less than an hour later, the to take pricing authority from Amazon books market at $12.99 and $14.99.’’ Publisher Defendant’s CEO made phone or to pull its e-books from Amazon. The 72. In addition to passing information calls, two minutes apart, to two other Publisher Defendants continued to fear through Apple and during their private Publisher Defendants’ CEOs, including that Amazon would act to protect its dinners and other in-person meetings, Macmillan’s Sargent. The CEO who ability to price e-books at $9.99 or less the Publisher Defendants frequently placed the calls admitted under oath to if any one of them acted alone. communicated by telephone to placing them specifically to learn if the Individual Publisher Defendants also exchange assurances of common action other two Publisher Defendants would feared punishment in the marketplace if in attempting to raise the retail price of sign with Apple prior to Apple’s iPad only its e-books suddenly became more e-books. These telephone launch. expensive at retail while other communications increased significantly • On the evening of Saturday, January publishers continued to allow retailers during the two-month period in which 23, 2010, Apple’s Cue emailed his boss, to compete on price. As Mr. Cue noted, the Publisher Defendants considered Steve Jobs, and noted that Penguin USA ‘‘all of them were very concerned about and entered the Apple Agency CEO David Shanks ‘‘want[ed] an being the only ones to sign a deal with Agreements. During December 2009 and assurance that he is 1 of 4 before us.’’ Penguin explicitly communicated January 2010, the Publisher Defendants’ signing.’’ The following Monday to Apple that it would sign an e-book U.S. CEOs placed at least 56 phone calls morning, at 9:46 a.m., Mr. Shanks called distribution agreement with Apple only to one another. Each CEO, including another Publisher Defendant’s CEO and if at least three of the other ‘‘major[]’’ Penguin’s Shanks and Macmillan’s the two talked for approximately four publishers did as well. Apple supplied Sargent, placed at least seven such minutes. Both Penguin and the other the needed assurances. phone calls. Publisher Defendant signed their Apple 70. While the Publisher Defendants 73. The timing, frequency, duration, Agency Agreements later that day. were discussing e-book distribution and content of the Publisher Defendant 74. On January 24, 2010, Hachette terms with Apple during the week of CEOs’ phone calls demonstrate that the signed an e-book distribution agreement January 18, 2010, Amazon met in New Publisher Defendants used them to seek with Apple. Over the next two days, York City with a number of prominent and exchange assurances of common Simon & Schuster, Macmillan, Penguin, authors and agents to unveil a new strategies and business plans regarding and HarperCollins all followed suit and program under which copyright holders the Apple Agency Agreements. For signed e-book distribution agreements could take their e-books directly to example, in addition to the telephone with Apple. Within these three days, the Amazon—cutting out the publisher— calls already described in this Publisher Defendants agreed with Apple and Amazon would pay royalties of up complaint: to abandon the longstanding wholesale to 70 percent, far in excess of what • Near the time Apple first presented model for selling e-books. The Apple publishers offered. This announcement the agency model, one Publisher Agency Agreements took effect further highlighted the direct Defendant’s CEO used a telephone simultaneously on April 3, 2010 with competitive threat Amazon posed to the call—ostensibly made to discuss a the release of Apple’s new iPad. Publisher Defendants’ business model. marketing joint venture—to tell Penguin 75. The final version of the pricing The Publisher Defendants reacted USA CEO David Shanks that ‘‘everyone tiers in the Apple Agency Agreements immediately. For example, Penguin is in the same place with Apple.’’ contained the $12.99 and $14.99 price USA CEO David Shanks reported being • After receiving Apple’s January 16, points for bestsellers, discussed earlier, ‘‘really angry’’ after ‘‘hav[ing] read 2010 revised proposal, executives of and also established prices for all other [Amazon’s] announcement.’’ After several Publisher Defendants responded newly released titles based on the thinking about it for a day, Mr. Shanks to the revised proposal and meetings by, hardcover list price of the same title. concluded, ‘‘[o]n Apple I am now more again, seeking and exchanging Although couched as maximum retail convinced that we need a viable confidential information. For example, prices, the price tiers in fact established alternative to Amazon or this nonsense on Sunday, January 17, one Publisher the retail e-book prices to be charged by will continue and get much worse.’’ Defendant’s CEO used his mobile phone Publisher Defendants. Another decisionmaker stated he was to call another Publisher Defendant’s 76. By entering the Apple Agency ‘‘p****d’’ at Amazon for starting to CEO and talk for approximately ten Agreements, each Publisher Defendant compete directly against the publishers minutes. And on the morning of January effectively agreed to require all of their and expressed his desire ‘‘to screw 19, Penguin USA CEO David Shanks e-book retailers to accept the agency Amazon.’’ had an extended telephone conversation model. Both Apple and the Publisher 71. To persuade one of the Publisher with the CEO of another Publisher Defendants understood the Agreements Defendants to stay with the others and Defendant. would compel the Publisher Defendants sign an agreement, Apple CEO Steve • On January 21, 2010, the CEO of to take pricing authority from all non- Jobs wrote to an executive of the one Publisher Defendant’s parent Apple e-book retailers. A February 10, Publisher Defendant’s corporate parent company instructed his U.S. 2010 presentation by one Publisher that the publisher had only two choices subordinate via email to find out Defendant applauded this result

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00008 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 12881

(emphasis in original): ‘‘The Apple effectively stopped selling Macmillan’s announced that it had no choice but to agency model deal means that we will print books and e-books. accept the agency model, and it soon have to shift to an agency model with 81. When Amazon stopped selling resumed selling Macmillan’s e-book and Amazon which [will] strengthen our Macmillan titles, other Publisher print book titles. control over pricing.’’ Defendants did not view the situation as 77. Apple understood that the final an opportunity to gain market share D. Defendants Further the Conspiracy Apple Agency Agreements ensured that from a weakened competitor. Instead, by Pressuring Another Publisher To the Publisher Defendants would raise they rallied to support Macmillan. For Adopt the Agency Model their retail e-book prices to the example, the CEO of one Publisher 85. When a company takes a pro- ostensible limits set by the Apple price Defendant’s parent company instructed competitive action by introducing a new tiers not only in Apple’s forthcoming the Publisher Defendant’s CEO that product, lowering its prices, or even iBookstore, but on Amazon.com and all ‘‘[Macmillan CEO] John Sargent needs adopting a new business model that other consumer sites as well. When our help!’’ The parent company CEO helps it sell more product at better asked by a Wall Street Journal reporter explained, ‘‘M[acm]illan have been prices, it typically does not want its at the January 27, 2010 iPad unveiling brave, but they are small. We need to competitors to copy its action, but event, ‘‘Why should she buy a book for move the lines. And I am thrilled to prefers to maintain a first-mover or * * * $14.99 from your device when know how A[mazon] will react against competitive advantage. In contrast, she could buy one for $9.99 from 3 or 4 of the big guys.’’ when companies jointly take collusive Amazon on the Kindle or from Barnes 82. The CEO of one Publisher action, such as instituting a coordinated & Noble on the Nook?’’ Apple CEO Defendant’s parent company assured price increase, they typically want the Steve Jobs responded, ‘‘that won’t be the Macmillan CEO John Sargent of his rest of their competitors to join them in case * * * the prices will be the company’s support in a January 31, that action. Because collusive actions same.’’ 2010 email: ‘‘I can ensure you that you are not pro-competitive or consumer 78. Apple understood that the retail are not going to find your company friendly, any competitor that does not price MFN was the key commitment alone in the battle.’’ The same parent go along with the conspirators can take mechanism to keep the Publisher company CEO also assured the head of more consumer friendly actions and see Defendants advancing their conspiracy Macmillan’s corporate parent in a its market share rise at the expense of in lockstep. Regarding the effect of the February 1 email that ‘‘others will enter the conspirators. Here, the Defendants MFN, Apple executive Pete Alcorn the battle field!’’ Overall, Macmillan acted consistently with a collusive remarked in the context of the European received ‘‘hugely supportive’’ arrangement, and inconsistently with a roll-out of the agency model in the correspondence from the publishing pro-competitive arrangement, as they spring of 2010: industry during Macmillan’s effort to sought to pressure another publisher force Amazon to accept the agency (whose market share was growing at the I told [Apple executive Keith Moerer] that model. Publisher Defendants’ expense after the I think he and Eddy [Cue] made it at least 83. As its battle with Amazon halfway to changing the industry continued, Macmillan knew that, Apple Agency Contracts became permanently, and we should keep the pads effective) to join them. on and keep fighting for it. I might regret that because the other Publisher Defendants, via the Apple Agency Agreements, had 86. Penguin appears to have taken the later, but right now I feel like it’s a giant win lead in these efforts. Its U.S. CEO, David to keep pushing the MFN and forcing people locked themselves into forcing agency off the [A]mazon model and onto ours. If on Amazon to advance their Shanks, twice directly told the anything, the place to give is the pricing— conspiratorial goals, Amazon soon executives of the holdout major long run, the mfn is more important. The would face similar edicts from a united publisher about his displeasure with interesting insight in the meeting was Eddy’s front of Publisher Defendants. And their decision to continue selling e- explanation that it doesn’t have to be that Amazon could not delist the books of all books on the wholesale model. Mr. broad—any decent MFN forces the model. five Publisher Defendants because they Shanks tried to justify the actions of the 79. Within the four months following together accounted for nearly half of conspiracy as an effort to save brick- the signing of the Apple Agency Amazon’s e-book business. Macmillan and-mortar bookstores and criticized the Agreements, and over Amazon’s CEO John Sargent explained the other publisher for ‘‘not helping’’ the objections, each Publisher Defendant company’s reasoning: ‘‘we believed group. The executives of the other had transformed its business whatever was happening, whatever publisher responded to Mr. Shanks’s relationship with all of the major e-book Amazon was doing here, they were complaints by explaining their retailers from a wholesale model to an going to face—they’re going to have objections to the agency model. agency model and imposed flat more of the same in the future one way 87. Mr. Shanks also encouraged a prohibitions against e-book discounting or another.’’ Another Publisher large print book and e-book retailer to or other price competition on all non- Defendant similarly recognized that punish the other publisher for not Apple e-book retailers. Macmillan was not acting unilaterally joining Defendants’ conspiracy. In 80. For example, after it signed its but rather was ‘‘leading the charge on March 2010, Mr. Shanks sent an email Apple Agency Agreement, Macmillan moving Amazon to the agency model.’’ message to an executive of the retailer presented Amazon a choice: adopt the 84. Amazon quickly came to fully complaining that the publisher ‘‘has agency model or lose the ability to sell appreciate that not just Macmillan but chosen to stay on their current model e-book versions of new hardcover titles all five Publisher Defendants had and will allow retailers to sell at for the first seven months of their irrevocably committed themselves to the whatever price they wish.’’ Mr. Shanks release. Amazon rejected Macmillan’s agency model across all retailers, argued that ‘‘[s]ince Penguin is looking ultimatum and sought to preserve its including taking control of retail pricing out for [your] welfare at what appears to ability to sell e-book versions of newly and thereby stripping away any be great costs to us, I would hope that released hardcover titles for $9.99. To opportunity for e-book retailers to [you] would be equally brutal to resist Macmillan’s efforts to force it to compete on price. Just two days after it Publishers who have thrown in with accept either the agency model or stopped selling Macmillan titles, your competition with obvious disdain delayed electronic availability, Amazon Amazon capitulated and publicly for your welfare. . . . I hope you make

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 12882 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

[the publisher] hurt like Amazon is to an increase in the retail prices of f. Eliminated the ability of e-book doing to [the Publisher Defendants].’’ newly released and bestselling e-books. retailers to fund retail e-book price 88. When the third-party retailer Prior to the Defendants’ conspiracy, decreases out of their own margins; and continued to promote the non-defendant consumers benefited from price g. Raised the retail prices of their publisher’s books, Mr. Shanks applied competition that led to $9.99 prices for newly released and bestselling e-books more pressure. In a June 22, 2010 email newly released and bestselling e-books. to the agreed prices—the ostensible to the retailer’s CEO, Mr. Shanks Almost immediately after Apple price caps—contained in the pricing claimed to be ‘‘baffled’’ as to why the launched its iBookstore in April 2010 schedule of their Apple Agency retailer would promote that publisher’s and the Publisher Defendants imposed Agreements. books instead of just those published by agency model pricing on all retailers, 97. Defendants’ conspiracy and ‘‘people who stood up for you.’’ the Publisher Defendants’ e-book prices agreement, in which the Publisher 89. Throughout the summer of 2010, for most newly released and bestselling Defendants and Apple agreed to raise, Apple also cajoled the holdout e-books rose to either $12.99 or $14.99. fix, and stabilize retail e-book prices, to publisher to adopt agency terms in line 93. Defendants’ conspiracy and end price competition among e-book with those of the Publisher Defendants, agreement to raise and stabilize retail e- retailers, and to limit retail price including on a phone call between book prices by collectively adopting the competition among the Publisher Apple CEO Steve Jobs and the holdout agency model and Apple price tiers for Defendants by fixing retail e-book publisher’s CEO. Apple flatly refused to their newly released and bestselling e- prices, constitutes a per se violation of sell the holdout publisher’s e-books books also led to an increase in average Section 1 of the Sherman Act, 15 U.S.C. unless and until it agreed to an agency retail prices of the balance of Publisher 1. relationship substantially similar to the Defendants’ e-book catalogs, their so- 98. Moreover, Defendants’ conspiracy arrangement between Apple and the called ‘‘backlists.’’ Now that the and agreement has resulted in obvious Publisher Defendants defined by the Publisher Defendants control the retail and demonstrable anticompetitive Apple Agency Agreements. prices of e-books—but Amazon effects on consumers in the trade e- maintains control of its print book retail books market by depriving consumers of E. Conspiracy Succeeds at Raising and the benefits of competition among e- Stabilizing Consumer E-book Prices prices—Publisher Defendants’ e-book prices sometimes are higher than book retailers as to both retail prices and 90. The ostensible maximum prices Amazon’s prices for print versions of retail innovations (such as e-book clubs included in the Apple Agency the same titles. and subscription plans), such that it Agreements’ price schedule represent, constitutes an unreasonable restraint on in practice, actual e-book prices. Indeed, VII. Violation Alleged trade in violation of Section 1 of the at the time the Publisher Defendants 94. Beginning no later than 2009, and Sherman Act, 15 U.S.C. 1. snatched retail pricing authority away continuing to date, Defendants and their 99. Where, as here, defendants have from Amazon and other e-book retailers, co-conspirators have engaged in a engaged in a per se violation of Section not one of them had built an internal conspiracy and agreement in 1 of the Sherman Act, no allegations retail pricing apparatus sufficient to do unreasonable restraint of interstate trade with respect to the relevant product anything other than set retail prices at and commerce, constituting a violation market, geographic market, or market the Apple Agency Agreements’ of Section 1 of the Sherman Act, 15 power are required. To the extent such ostensible caps. Once their agency U.S.C. 1. This offense is likely to allegations may otherwise be necessary, agreements took effect, the Publisher continue and recur unless the relief the relevant product market for the Defendants raised e-book prices at all requested is granted. purposes of this action is trade e-books. retail outlets to the maximum price 95. The conspiracy and agreement The anticompetitive acts at issue in this level within each tier. Even today, two consists of an understanding and case directly affect the sale of trade e- years after the Publisher Defendants concert of action among Defendants and books to consumers. No reasonable began setting e-book retail prices their co-conspirators to raise, fix, and substitute exists for e-books. There are according to the Apple price tiers, they stabilize retail e-book prices, to end no technological alternatives to e-books, still set the retail prices for the price competition among e-book thousands of which can be stored on a electronic versions of all or nearly all of retailers, and to limit retail price single small device. E-books can be their bestselling hardcover titles at the competition among the Publisher stored and read on electronic devices, ostensible maximum price allowed by Defendants, ultimately effectuated by while print books cannot. E-books can those price tiers. collectively adopting and adhering to be located, purchased, and downloaded 91. The Publisher Defendants’ functionally identical methods of selling anywhere a customer has an internet collective adoption of the Apple Agency e-books and price schedules. connection, while print books cannot. Agreements allowed them (facilitated by 96. For the purpose of forming and Industry firms also view e-books as a Apple) to raise, fix, and stabilize retail effectuating this agreement and separate market segment from print e-book prices in three steps: (a) they conspiracy, some or all Defendants did books, and the Publisher Defendants took away retail pricing authority from the following things, among others: were able to impose and sustain a retailers; (b) they then set retail e-book a. Shared their business information, significant retail price increase for their prices according to the Apple price plans, and strategies in order to trade e-books. tiers; and (c) they then exported the formulate ways to raise retail e-book 100. The relevant geographic market agency model and higher retail prices to prices; is the United States. The rights to the rest of the industry, in part to b. Assured each other of support in license e-books are granted on territorial comply with the retail price MFN attempting to raise retail e-book prices; bases, with the United States typically included in each Apple Agency c. Employed ostensible joint venture forming its own territory. E-book Agreement. meetings to disguise their attempts to retailers typically present a unique 92. Defendants’ conspiracy and raise retail e-book prices; storefront to U.S. consumers, often with agreement to raise and stabilize retail e- d. Fixed the method of and formulas e-books bearing different retail prices book prices by collectively adopting the for setting retail e-book prices; than the same titles would command on agency model and Apple price tiers led e. Fixed tiers for retail e-book prices; the same retailer’s foreign Web sites.

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00010 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 12883

101. The Publisher Defendants Section 1 of the Sherman Act, 15 U.S.C. United States District Court for the possess market power in the market for 1, through fixing the method and Southern District of New York trade e-books. The Publisher Defendants manner in which they sell e-books, or United States Of America, successfully imposed and sustained a otherwise agreeing to set the price or significant retail price increase for their release date for e-books, or collective Plaintiff, trade e-books. Collectively, they create negotiation of e-book agreements, or v. and distribute a wide variety of popular otherwise collectively restraining retail Apple, Inc., et al., e-books, regularly comprising over half price competition for e-books; Defendants. of the New York Times fiction and non- c. Prohibit the collusive setting of Civil Action No. 12–CV–2826 (DLC). fiction bestseller lists. Collectively, they price tiers that can de facto fix prices; ECF Case. provide a critical input to any firm d. Declare null and void the Apple selling trade e-books to consumers. Any Agency Agreements and any agreement Competitive Impact Statement retailer selling trade e-books to between a Publisher Defendant and an Pursuant to Section 2(b) of the consumers would not be able to forgo e-book retailer that restricts, limits, or Antitrust Procedures and Penalties Act profitably the sale of the Publisher impedes the e-book retailer’s ability to (‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C. Defendants’ e-books. set, alter, or reduce the retail price of 16(b)-(h), Plaintiff United States of 102. Defendants’ agreement and any e-book or to offer price or other America (‘‘United States’’) files this conspiracy has had and will continue to promotions to encourage consumers to Competitive Impact Statement relating have anticompetitive effects, including: purchase any e-book, or contains a retail to the proposed Final Judgment against a. Increasing the retail prices of trade price MFN; Defendants Verlagsgruppe George Von e-books; e. Reform the agreements between Holtzbrinck GmbH and Holtzbrinck b. Eliminating competition on price Apple and Publisher Defendants to Publishers, LLC d/b/a Macmillan (these among e-book retailers; strike the retail price MFN clauses as two entities are referred to collectively c. Restraining competition on retail void and unenforceable; and herein as ‘‘Macmillan’’), submitted on price among the Publisher Defendants; f. Award to Plaintiff its costs of this d. Restraining competition among the February 8, 2013, for entry in this action and such other and further relief antitrust proceeding. Publisher Defendants for favorable as may be appropriate and as the Court relationships with e-book retailers; may deem just and proper. I. Nature and Purpose of the Proceeding e. Constraining innovation among e- Dated: April 11, 2012 On April 11, 2012, the United States book retailers; For Plaintiff f. Entrenching incumbent publishers’ filed a civil antitrust Complaint alleging United States of America: that Apple, Inc. (‘‘Apple’’) and five of favorable position in the sale and Sharis A. Pozen distribution of print books by slowing the six largest publishers in the United Acting Assistant Attorney General for States (‘‘Publisher Defendants’’) the migration from print books to e- Antitrust books; restrained competition in the sale of g. Making more likely express or tacit Joseph F. Wayland electronic books (‘‘e-books’’), in collusion among publishers; and Deputy Assistant Attorney General violation of Section 1 of the Sherman h. Reducing competitive pressure on Gene Kimmelman Act, 15 U.S.C. 1. Shortly after filing the print book prices. Chief Counsel for Competition Policy Complaint, the United States filed a 103. Defendants’ agreement and and Intergovernmental Relations proposed final judgment (‘‘Original conspiracy is not reasonably necessary Patricia A. Brink Judgment’’) with respect to Defendants to accomplish any procompetitive Director of Civil Enforcement Hachette Book Group, Inc. (‘‘Hachette’’), HarperCollins Publishers L.L.C. objective, or, alternatively, its scope is Mark W. Ryan (‘‘HarperCollins’’), and Simon & broader than necessary to accomplish Director of Litigation any such objective. [email protected] Schuster, Inc. (‘‘Simon & Schuster’’). That Original Judgment (Docket No. VIII. Request for Relief John R. Read Chief 119) settled this suit as to those three 104. To remedy these illegal acts, the David C. Kully defendants. Following a thorough United States requests that the Court: Assistant Chief Tunney Act review process, the Court a. Adjudge and decree that Litigation III Section granted the United States’ Motion for Defendants entered into an unlawful [email protected] Entry of the Original Judgment (Docket contract, combination, or conspiracy in Daniel Mccuaig No. 113). unreasonable restraint of interstate trade Nathan P. Sutton On December 18, 2012, Defendants and commerce in violation of Section 1 Mary Beth Mcgee The Penguin Group, a Division of of the Sherman Act, 15 U.S.C. 1; Owen M. Kendler Pearson plc, and Penguin Group (USA), b. Enjoin the Defendants, their William H. Jones II Inc. (collectively ‘‘Penguin’’) agreed to officers, agents, servants, employees and Stephen T. Fairchild settle on substantially the same terms as attorneys and their successors and all Attorneys for the United States those contained in the Original other persons acting or claiming to act Litigation III Section Judgment. That proposed Final in active concert or participation with 450 Fifth Street, N.W., Suite 4000 Judgment against Penguin (Docket No. one or more of them, from continuing, Washington, D.C. 20530 162–1) is now subject to a public maintaining, or renewing in any Telephone: (202) 307–0520 comment period, which closes on manner, directly or indirectly, the Facsimile: (202) 514–7308 March 5, 2013. Pursuant to the Court’s conduct alleged herein or from engaging [email protected] January 7, 2013 Order (Docket No. 169), in any other conduct, combination, [email protected] the United States will file the public conspiracy, agreement, understanding, [email protected] comments along with its response to the plan, program, or other arrangement [email protected] comments by April 5, 2013. If the having the same effect as the alleged [email protected] United States continues to believe that violation or that otherwise violates [email protected] entry of the proposed Final Judgment

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 12884 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

against Penguin is appropriate, it will price of their books to supracompetitive and see if we can all make a go of this move the Court for entry by April 19, levels. Compl. ¶¶ 35–36, 46. They met to create a real mainstream e-books 2013, and the Court will have the privately to discuss ways to collectively market at $12.99 and $14.99.’’ Id. Apple opportunity to determine if the solve ‘‘the $9.99 problem.’’ Compl. ¶¶ and the Publisher Defendants adopted proposed Final Judgment against 39–45. Ultimately, Publisher Defendants these price points in all of the Apple Penguin is in the public interest. agreed to act collectively to raise retail Agency Agreements, which all were Macmillan has now agreed to settle on e-book prices. Compl. ¶¶ 47–50. signed within a three-day span in substantially the same terms as those Apple’s entry into the e-book business January 2010. Compl. ¶¶ 74–75. As a contained in the Original Judgment. A provided a perfect opportunity to result of Defendants’ illegal agreement, proposed Final Judgment with respect coordinate the Publisher Defendants’ consumers have paid higher prices for e- to Macmillan (‘‘proposed Macmillan collective action to raise e-book prices. books than they would have paid in a Final Judgment’’ or ‘‘PMFJ’’) that Compl. ¶ 51. At the suggestion of two market free of collusion. Compl. ¶¶ 90– embodies that settlement was filed Publisher Defendants, Apple began to 93. today. The last remaining active consider selling e-books under an Defendant is now Apple, Inc. ‘‘agency model,’’ whereby the III. Explanation of the Proposed The proposed Macmillan Final publishers would set the prices Macmillan Final Judgment Judgment is described in more detail in consumers ultimately paid for e-books The language and relief contained in Section III below. Because the language and Apple would take a commission as the proposed Macmillan Final Judgment of the proposed Macmillan Final the selling agent. Compl. ¶¶ 52–54, 63. is largely identical to the terms included Judgment closely follows the language Apple recognized that its unique ability in the Original Judgment and the of the Original Judgment, this to organize the Publisher Defendants’ proposed Penguin Final Judgment. Competitive Impact Statement efforts to upset Amazon’s $9.99 pricing Macmillan’s decision to join with all the incorporates but does not repeat the put it in a position to realize margins other Publisher Defendants in agreeing extensive record relating to the Original (30 percent on each sale) far in excess to the settlement terms will provide Judgment. (For the Court’s convenience, of what other retailers then averaged on prompt, certain, and effective remedies redlines of the proposed Macmillan their sales of newly released and that will continue the effort to restore Final Judgment against both the Original bestselling e-books, at the cost of ‘‘the competition to the marketplace. Judgment and the proposed Penguin customer pay[ing] a little more.’’ Compl. Settlement likely will lead to lower e- Final Judgment are attached as Exhibits ¶ 56. book prices for many Macmillan titles; A and B, respectively.) To achieve this goal, Apple first prices for titles offered by The United States and Macmillan expressly proposed to each Publisher HarperCollins, Hachette, and Simon & have stipulated that the proposed Defendant that it adopt an agency Schuster fell soon after those publishers Macmillan Final Judgment may be pricing model with every outlet that entered into new contracts as a result of entered after compliance with the would compete with Apple for retail e- the Original Judgment.2 The APPA, unless the United States book sales, Compl. ¶ 58, and later requirements and prohibitions included withdraws its consent. Entry of the replaced that express requirement with in the proposed Macmillan Final proposed Macmillan Final Judgment a unique most favored nation (‘‘MFN’’) Judgment will eliminate Macmillan’s would terminate this action as to pricing provision that effectively illegal conduct, prevent recurrence of Macmillan, except to the extent that enforced the Publisher Defendants’ the same or similar conduct by Macmillan has stipulated that it will commitment to impose the agency Macmillan, and establish a robust cooperate in the United States’ ongoing pricing model on all other retailers. antitrust compliance program. litigation against Apple, and that this Compl. ¶¶ 65–66. This MFN protected A. Differences Between the Proposed Court would retain jurisdiction to Apple from price competition from Macmillan Final Judgment and the construe, modify, and enforce the other retailers, guaranteeing that its 30 Original Judgment and the Proposed proposed Macmillan Final Judgment percent margin would not be disturbed. Penguin Final Judgment and to punish violations thereof. Compl. ¶ 65. Apple kept each Publisher Defendant informed about the status of Unlike the Original Judgment and the II. Brief Summary of the Events Giving its negotiations with other Publisher proposed Penguin Final Judgment, the Rise to the Alleged Violation of the Defendants. Compl. ¶ 61. In January Antitrust Laws 2 2010, Apple sent to each Publisher See, e.g., Scott Nichols, HarperCollins Offering As described in detail in the United Discounted eBooks After Price Fixing Settlement, Defendant substantively identical term TechRadar (Sept. 12, 2012), http:// States’ Complaint (Docket No. 1), and sheets that Apple told them were www.techradar.com/news/portable-devices/ the two previous Competitive Impact devised after ‘‘talking to all the other portable-media/harpercollins-offering-discounted- Statements (‘‘Original CIS,’’ Docket No. publishers.’’ Compl. ¶¶ 62–64. Those ebooks-after-price-fixing-settlement-1096467 5 and ‘‘Penguin CIS,’’ Docket No. 163), (‘‘Bestselling ebooks from the publisher such as term sheets formed the basis of the ‘The Fallen Angel’ and ‘Solo’ can now be found for Publisher Defendants desired to raise nearly identical agency agreements $9.99 on Amazon, Barnes and Noble, and other retail prices for e-books. Compl. ¶ 3. signed by each Publisher Defendant online retailers.’’); Nate Hoffelder, Hachette Has They were primarily upset by (‘‘Apple Agency Agreements’’). Dropped Agency Pricing on eBooks, The Digital Amazon.com, Inc.’s (‘‘Amazon’s’’) The purpose of these agreements was Reader (Dec. 4, 2012), http://www.the-digital- reader.com/2012/12/04/hachette-has-dropped- pricing of newly released and to raise and stabilize e-book prices agency-pricing-on-ebooks/ (‘‘Amazon is discounting bestselling e-books at $9.99 or less. while insulating Apple from the ebooks by $1 to $4 from the list price, and both Compl. ¶¶ 32–34. Publisher Defendants competition. Compl. ¶ 66. Apple CEO Barnes & Noble and Apple are making similar discounts’’); Jeremy Greenfield, Simon & Schuster feared that Amazon would resist any Steve Jobs explained to one Publisher Has a New Deal With Amazon, Other Retailers, unilateral attempt to force an increase in Defendant that the Apple Agency Digital Book World (Dec. 9, 2012), http:// e-book prices and that, even if an Agreements provided a path for the www.digitalbookworld.com/2012/looks-like-simon- individual Publisher Defendant Publisher Defendants away from $9.99 schuster-has-a-new-deal-with-amazon-other- retailers/ (‘‘Ebook prices were lowered for Simon & succeeded in such an attempt, that and to higher retail e-book prices. Schuster titles over the weekend on sites like Publisher Defendant would lose sales to Compl. ¶ 71. He urged the Publisher Amazon and Nook.com to levels several dollars any competitors that had not forced the Defendants to ‘‘[t]hrow in with Apple below what they had been earlier in the week.’’).

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00012 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 12885

proposed Macmillan Final Judgment the term ‘‘e-book’’ as used in the PMFJ also prohibits terms that prevent retail requires Macmillan immediately to stop to exclude ‘‘the electronically formatted price competition. Sections V.A, V.B, enforcing restrictions on discounting or version of a book marketed solely for and V.C limit Macmillan’s ability to promotions contained in its contracts use in connection with academic enter new agreements (and enforce old with retailers. The Original Judgment coursework’’). The conspiracy among agreements) that contain either of two and the proposed Penguin Final the Publisher Defendants and Apple components of the Apple Agency Judgment allowed each settling challenged in the Complaint concerned Agreements: a ban on retailer publisher to choose whether to the sale of trade e-books, not e-book discounting, or retail price-matching immediately allow discounting or, versions of academic textbooks. Compl. MFNs. Sections V.A. and V.B. prevent alternatively, to permit discounting only ¶¶ 27 n.1, 99. Unlike the other Publisher Macmillan, until December 18, 2014, after the Court’s approval of the Defendants, which publish only trade e- from forbidding retailers to offer price settlement and the orderly termination books, Macmillan also publishes e- promotions or discounts on its e-books. of the publisher’s existing contracts textbooks. Macmillan’s settlement Prohibiting Macmillan, for a set period, with retailers. Each Publisher Defendant necessitates formalizing in the proposed from stopping e-book retailers from under the Original Judgment and Macmillan Final Judgment what the discounting will help ensure that proposed Penguin Final Judgment chose United States previously stated in its Macmillan’s future contracts will not be the latter option and several months Response to Comments concerning the set under the collusive conditions that passed before consumers saw the Original Judgment: ‘‘ ‘e-books,’ in the produced the Apple Agency benefits of the settlements through context of this case does not encompass Agreements. See PMFJ §§ V.A–B. For a lower retail prices on many of the ‘[n]on-trade e-books includ[ing] * * * five-year period, Section V.C also stops settling publishers’ e-books. The two- academic textbooks * * *.’ ’’ Response Macmillan from entering into an year cooling-off period for those to Comments (Docket No. 81) at 46–47 agreement with an e-book retailer that Publisher Defendants commenced when (quoting Compl. ¶ 27 n.1). Third, to contains a Price MFN (defined as an each terminated its previous contracts make it clear that Defendant MFN relating to price, revenue share, or with retailers. Verlagsgruppe Georg von Holtzbrinck, commission available to any retailer). To provide for more prompt relief to Macmillan’s German parent, would be This will eliminate Macmillan’s ability consumers, the proposed Macmillan subject to all provisions of the proposed to use such MFNs to achieve, for a Final Judgment does not give Macmillan Macmillan Final Judgment if it worked second time, the results of the collusive a choice. Macmillan must allow its e- in concert with Macmillan to evade agreements. See also Original CIS book retailers to discount within three Macmillan’s obligations under the § III.B.1. business days of agreeing to the settlement (e.g., by having Macmillan Further, Macmillan may not retaliate settlement, even if it has not formalized transfer assets to its German parent), the against or punish an e-book retailer new contracts with retailers. See PMFJ Applicability section (PMFJ § III) now based on the retailer’s e-book prices or § IV.A. To induce Macmillan to accept expressly binds Defendant its discounting or promotional choices. this more stringent term, the United Verlagsgruppe Georg von Holtzbrinck if PMFJ § V.D. Nor may Macmillan States agreed that the two-year cooling- it works with Macmillan in any such attempt to retaliate by proxy, as this off period for Macmillan would run evasion. provision bars Macmillan from from December 18, 2012, the date on For completeness, we describe below, encouraging another company to which Penguin signed its settlement. in abbreviated form, the purposes of the retaliate against an e-book retailer on its See PMFJ §§ V.A–B. Consumers are other main provisions of the proposed behalf. However, the anti-retaliation better served by bringing more Macmillan Final Judgment. These provision does not prohibit Macmillan immediate retail price competition to provisions mirror those of the Original from unilaterally entering into and the market, and, given the settlements of Judgment and proposed Penguin Final enforcing agency agreements with e- all the other Publisher Defendants, a 23- Judgment. book retailers after the 23-month month cooling-off period is sufficient to proscription, required in Sections V.A ensure that future contracts entered into B. Required Conduct (Section IV) and V.B, has expired. See also Original by these publishers will not be set under In order to reduce the risk that CIS § III.B.2. the collusive conditions that produced Macmillan may use future joint ventures In addition to addressing terms used the Apple Agency Agreements. to eliminate competition among in the Apple Agency Agreements to The proposed Macmillan Final Publisher Defendants, Section IV.C implement the conspiracy, the proposed Judgment contains three other requires that Macmillan provide Macmillan Final Judgment also forbids significant changes. First, at the time advance notice to the Department of a recurrence of the alleged conspiracy, they agreed to settle with the United Justice before forming or modifying a and prohibits industry practices that States, the other settling publishers each joint venture between it and another facilitated it. Section V.E prohibits continued to operate under the Apple publisher related to e-books. See also Macmillan from agreeing with e-book Agency Agreements that were the Original CIS § III.A.2. publishers to raise or set e-book retail products of the Publisher Defendants’ Additionally, to ensure Macmillan’s prices or coordinate terms relating to the conspiracy with Apple. Because compliance with the proposed licensing, distribution, or sale of e- Macmillan has already terminated its Macmillan Final Judgment, Section IV.D books. Section V.F likewise prohibits Apple Agency Agreement and has requires that Macmillan provide, on a Macmillan from directly or indirectly entered a new Apple contract without quarterly basis, each e-book agreement it conveying confidential or competitively an MFN, requiring Macmillan to has reached with any e-book retailer on sensitive information to any other e- terminate its existing contract with or after January 1, 2012. book publisher. Banning such Apple would be superfluous. Second, communications is critical here, where the proposed Macmillan Final Judgment C. Prohibited Conduct (Section V) communications among publishing expressly carves out the sale of In order to ensure that e-book retailers competitors were a common practice electronic versions of academic can compete on the price of e-books and facilitated the collusive agreement textbooks from its requirements and sold to consumers in the future, the alleged in the Complaint. See also prohibitions. See PMFJ § II.D (defining proposed Macmillan Final Judgment Original CIS § III.B.3.

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 12886 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

D. Permitted Conduct (Section VI) attorneys’ fees. Entry of the proposed VII. Standard of Review Under the The proposed Macmillan Final Macmillan Final Judgment will neither APPA for the Proposed Macmillan Judgment also specifically carves out impair nor assist the bringing of any Final Judgment some conduct, which normally is private antitrust damage action. Under The Clayton Act, as amended by the permitted under the antitrust laws, that the provisions of Section 5(a) of the APPA, requires that proposed consent Macmillan may pursue unilaterally. Clayton Act, 15 U.S.C. 16(a), the judgments in antitrust cases brought by Section VI.A of the proposed Macmillan proposed Macmillan Final Judgment has the United States be subject to a sixty- Final Judgment allows Macmillan to no prima facie effect in any subsequent day comment period, after which the compensate e-book retailers for services private lawsuit that may be brought court shall determine whether entry of that they provide to publishers or against the Defendants. the proposed Final Judgment ‘‘is in the consumers to help promote or sell more VI. Procedures Available for public interest.’’ 15 U.S.C. 16(e)(1). In e-books. Section VI.B permits Modification of the Proposed making that determination, the court is Macmillan to negotiate a commitment Macmillan Final Judgment directed to consider: from an e-book retailer that a retailer’s The United States and Macmillan (A) The competitive impact of such aggregate expenditure on discounts and judgment, including termination of alleged promotions of Macmillan’s e-books will have stipulated that the proposed Macmillan Final Judgment may be violations, provisions for enforcement and not exceed the retailer’s aggregate modification, duration of relief sought, commission under an agency agreement entered by this Court after compliance anticipated effects of alternative remedies in which Macmillan sets the e-book with the provisions of the APPA, actually considered, whether its terms are price and the retailer is compensated provided that the United States has not ambiguous, and any other competitive through a commission. These provisions withdrawn its consent. The APPA considerations bearing upon the adequacy of allow Macmillan to prevent a retailer conditions entry of the decree upon this such judgment that the court deems selling its entire catalogue at a sustained Court’s determination that the proposed necessary to a determination of whether the loss, while still permitting retailers to Macmillan Final Judgment is in the consent judgment is in the public interest; and offer discounts under Sections V.A and public interest. The APPA provides a period of at (B) The impact of entry of such judgment V.B. Absent the collusion here, the upon competition in the relevant market or antitrust laws normally would permit a least sixty (60) days preceding the markets, upon the public generally and publisher unilaterally to negotiate for effective date of the proposed individuals alleging specific injury from the such protections. See also Original CIS Macmillan Final Judgment within violations set forth in the complaint § III.C. which any person may submit to the including consideration of the public benefit, United States written comments if any, to be derived from a determination of E. Antitrust Compliance (Section VII) regarding the proposed Macmillan Final the issues at trial. As outlined in Section VII, Macmillan Judgment. Any person who wishes to 15 U.S.C. 16(e)(1)(A) & (B); see generally also must designate an Antitrust comment should do so within sixty (60) United States v. KeySpan Corp., 763 F. Compliance Officer, who is required to days of publication of this Competitive Supp. 2d 633, 637–38 (S.D.N.Y. 2011) distribute copies of the proposed Impact Statement in the Federal (discussing Tunney Act standards); Macmillan Final Judgment; ensure Register, or the last date of publication United States v. SBC Commc’ns, Inc., training related to the proposed in a newspaper of the summary of this 489 F. Supp. 2d 1 (D.DC 2007) Macmillan Final Judgment and the Competitive Impact Statement, (assessing standards for public interest antitrust laws; certify compliance with whichever is later. determination). the proposed Macmillan Final All comments received during this In other words, under the Tunney Judgment; and conduct an annual period will be considered by the United Act, a court considers, among other antitrust compliance audit. This States Department of Justice, which things, the relationship between the compliance program is necessary remains free to withdraw its consent to remedy secured and the specific considering the extensive the proposed Macmillan Final Judgment allegations set forth in the government’s communication among competitors’ at any time prior to the Court’s entry of complaint, whether the decree is CEOs that facilitated Defendants’ judgment. The comments and the sufficiently clear, whether enforcement agreement. See also Original CIS § III.D. responses of the United States will be mechanisms are sufficient, and whether IV. Alternatives to the Proposed filed with the Court and published the decree may positively harm third Macmillan Final Judgment either in the Federal Register or, with parties. See United States v. Microsoft the Court’s permission, on the Corp., 56 F.3d 1448, 1458–62 (DC Cir. The United States considered, as an 3 Department of Justice Web site. Written 1995). The court’s inquiry is necessarily alternative to the proposed Macmillan comments should be submitted to: John Final Judgment, a full trial on the merits a limited one as the government is Read, Chief, Litigation III Section, entitled to ‘‘broad discretion to settle against Macmillan. The United States Antitrust Division, U.S. Department of believes that the relief contained in the with the defendant within the reaches of Justice, 450 5th Street NW., Suite 4000, proposed Macmillan Final Judgment the public interest.’’ Id. at 1461; accord Washington, DC 20530. will more quickly restore retail price United States v. Alex. Brown & Sons, The proposed Macmillan Final competition to consumers. Inc., 963 F. Supp. 235, 238 (S.D.N.Y. Judgment provides that the Court retains 1997) (quoting Microsoft, 56 F.3d at V. Remedies Available to Private jurisdiction over this action, and the 1460), aff’d sub nom. United States v. Litigants parties may apply to the Court for any Bleznak, 153 F.3d 16 (2d Cir. 1998); Section 4 of the Clayton Act, 15 order necessary or appropriate for United States v. KeySpan, 763 F. Supp. U.S.C. 15, provides that any person who modification, interpretation, or 2d at 637 (same). With respect to the has been injured as a result of conduct enforcement of the Final Judgment. adequacy of the relief secured by the prohibited by the antitrust laws may decree, a court may not ‘‘engage in an 3 The United States posts or links to all public bring suit in federal court to recover materials submitted in relation to United States v. unrestricted evaluation of what relief three times the damages the person has Apple, Inc. at: http://www.justice.gov/atr/cases/ would best serve the public.’’ United suffered, as well as costs and reasonable applebooks.html. States v. BNS, Inc., 858 F.2d 456, 462

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00014 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 12887

(9th Cir. 1988) (quoting United States v. 666 (emphasis added) (citations Stephanie A. Fleming Bechtel Corp., 648 F.2d 660, 666 (9th omitted); accord Alex. Brown, 963 F. Attorneys for the United States Cir. 1981)); see also Alex. Brown & Sons, Supp. at 238.4 United States Department of Justice 963 F. Supp. at 238. Instead, the court VIII. Determinative Documents Antitrust Division should grant due respect to the United 450 Fifth Street NW., Suite 4000 States’ ‘‘prediction as to the effect of There are no determinative materials Washington, DC 20530 or documents within the meaning of the proposed remedies, its perception of the (202) 532–4753 APPA that were considered by the market structure, and its view of the [email protected] nature of the case.’’ United States v. United States in formulating the Archer-Daniels-Midland Co., 272 F. proposed Macmillan Final Judgment. Certificate of Service Supp. 2d 1, 6 (D.DC 2003). After all, the Dated: February 8, 2013 I, Stephen T. Fairchild, hereby certify court is required to determine not Respectfully submitted, that on February 8, 2013, I caused a whether a particular decree is the one s/Mark W. Ryan copy of the United States’ Competitive that will best serve society, but whether Mark W. Ryan Impact Statement to be served by the the settlement is ‘‘within the reaches of Lawrence E. Buterman Electronic Case Filing System, which the public interest.’’ Bechtel, 648 F.2d at Daniel McCuaig included the individuals listed below.

For Apple: For Penguin U.S.A. and the Penguin Group:

Daniel S. Floyd Daniel F. McInnis Gibson, Dunn & Crutcher LLP Akin Gump Strauss Hauer & Feld, LLP 333 S. Grand Avenue, Suite 4600 1333 New Hampshire Avenue NW., Los Angeles, CA 90070 Washington, DC 20036 (213) 229–7148 (202) 887–4000 [email protected] [email protected] For Simon & Schuster: Yehudah Lev Buchweitz Weil, Gotshal & Manges LLP (NYC) 767 Fifth Avenue, 25th Fl. New York, NY 10153 (212) 310–8000 x8256 [email protected] For Macmillan and Verlagsgruppe Georg Von Holtzbrinck GMBH: Joel M. Mitnick Sidley Austin LLP 787 Seventh Avenue New York, NY 10019 (212) 839–5300 [email protected] For Hachette: Walter B. Stuart, IV Freshfields Bruckhaus Deringer LLP 601 Lexington Avenue New York, NY 10022 (212) 277–4000 [email protected] For HarperCollins: Paul Madison Eckles Skadden, Arps, Slate, Meagher & Flom Four Times Square, 42nd Floor New York, NY 10036 (212) 735–2578 [email protected]

Additionally, courtesy copies of this Competitive Impact Statement have been provided to the following:

For the State of Connecticut: For the State of Texas:

W. Joseph Nielsen, Assistant Attorney General, Antitrust Division, Of- Gabriel R. Gervey, Assistant Attorney General, Antitrust Division, Office fice of the Attorney General, 55 Elm Street, Hartford, CT 06106, of the Attorney General of Texas, 300 W. 15th Street, Austin, Texas (860) 808–5040, [email protected] 78701, (512) 463–1262, [email protected]. For the Private Plaintiffs:

4 Cf. BNS, 858 F.2d at 464 (holding that the 713, 716 (D. Mass. 1975) (the court is constrained (discussing whether ‘‘the remedies [obtained in the court’s ‘‘ultimate authority under the [Tunney Act] to ‘‘look at the overall picture not hypercritically, decree are] so inconsonant with the allegations is limited to approving or disapproving the consent nor with a microscope, but with an artist’s reducing charged as to fall outside of the ‘reaches of the decree’’); United States v. Gillette Co., 406 F. Supp. glass’’). See generally Microsoft, 56 F.3d at 1461 public interest’ ’’).

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 12888 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

For the State of Connecticut: For the State of Texas:

Jeff D. Friedman, Hagens Berman, 715 Hearst Ave., Suite 202, Berke- s/Stephen T. Fairchild, Stephen T. Fairchild, Attorney for the United ley, CA 94710, (510) 725–3000, [email protected] States, United States Department of Justice, Antitrust Division, 450 Fifth Street NW., Suite 4000, Washington, DC 20530, (202) 532– 4925, [email protected].

BILLING CODE P

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.003 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12889

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.004 12890 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.005 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12891

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.006 12892 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.007 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12893

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.008 12894 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.009 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12895

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.010 12896 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.011 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12897

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.012 12898 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.013 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12899

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.014 12900 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.015 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12901

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.016 12902 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.017 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12903

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.018 12904 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.019 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12905

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.020 12906 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.021 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12907

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.022 12908 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.023 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12909

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.024 12910 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.025 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12911

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.026 12912 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.027 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12913

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.028 12914 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.029 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12915

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.030 12916 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.031 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12917

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.032 12918 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.033 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12919

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.034 12920 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.035 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12921

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.036 12922 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.037 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12923

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.038 12924 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.039 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12925

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.040 12926 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4725 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.041 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices 12927

BILLING CODE C [Proposed] Final Judgment as to trial or adjudication of any issue of fact United States District Court for the Defendants Verlagsgruppe Georg Von or law; Southern District of New York Holtzbrinck GMBH & Holtzbrinck And whereas, this Final Judgment Publishers, LLC D/B/A Macmillan does not constitute any admission by United States of America, Whereas, Plaintiff, the United States Macmillan that the law has been Plaintiff, of America filed its Complaint on April violated or of any issue of fact or law, 11, 2012, alleging that Defendants v. other than that the jurisdictional facts as conspired to raise retail prices of E- alleged in the Complaint are true; Apple, Inc., et al., books in violation of Section 1 of the And whereas, Macmillan agrees to be Sherman Act, as amended, 15 U.S.C. 1, Defendants. bound by the provisions of this Final and Plaintiff and Macmillan, by their Judgment pending its approval by the Civil Action No. 1:12–CV–2826 (DLC). respective attorneys, have consented to Court; ECF Case. the entry of this Final Judgment without

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 EN25FE13.042 12928 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

And whereas, Plaintiff requires most of the value to consumers is employees. Where the Final Judgment Macmillan to agree to undertake certain derived from audio or video content imposes an obligation on Macmillan to actions and refrain from certain conduct contained in the file that is not included engage in or refrain from engaging in for the purpose of remedying the loss of in the print version of the book; or (4) certain conduct, that obligation shall competition alleged in the Complaint; the electronically formatted version of a apply to Macmillan and to any joint And whereas, Macmillan has book marketed solely for use in venture or other business arrangement represented to the United States that the connection with academic coursework. established by Macmillan and one or actions and conduct restrictions can and E. ‘‘E-book Publisher’’ means any more Publisher Defendants. will be undertaken and that it will later Person that, by virtue of a contract or K. ‘‘Penguin’’ means (1) Penguin raise no claim of hardship or difficulty other relationship with an E-book’s Group (USA), Inc., a Delaware as grounds for asking the Court to author or other rights holder, owns or corporation with its principal place of modify any of the provisions contained controls the necessary copyright or business in New York, New York; (2) below; other authority (or asserts such The Penguin Group, a division of U.K. Now therefore, before any testimony ownership or control) over any E-book corporation Pearson plc with its is taken, without trial or adjudication of sufficient to distribute the E-book principal place of business in London, any issue of fact or law, and upon within the United States to E-book England; (3) The Penguin Publishing consent of Macmillan, it is ordered, Retailers and to permit such E-book Company Ltd, a company registered in adjudged, and decreed: Retailers to Sell the E-book to England and Wales with its principal consumers in the United States. place of business in London, England; I. Jurisdiction Publisher Defendants are E-book and (4) Dorling Kindersley Holdings This Court has jurisdiction over the Publishers. For purposes of this Final Limited, a company registered in subject matter of this action and over Judgment, E-book Retailers are not E- England and Wales with its principal Macmillan. The Complaint states a book Publishers. place of business in London, England; claim upon which relief may be granted F. ‘‘E-book Retailer’’ means any and each of their respective successors against Macmillan under Section 1 of Person that lawfully Sells (or seeks to and assigns (expressly including the Sherman Act, as amended, 15 U.S.C. lawfully Sell) E-books to consumers in Penguin Random House, a joint venture 1. the United States, or through which a by and between Pearson plc and Publisher Defendant, under an Agency Bertelsmann SE & Co. KGaA, and any II. Definitions Agreement, Sells E-books to consumers. similar joint venture between Penguin As used in this Final Judgment: For purposes of this Final Judgment, and Random House Inc.); each of their A. ‘‘Agency Agreement’’ means an Publisher Defendants and all other respective subsidiaries, divisions, agreement between an E-book Publisher Persons whose primary business is book groups, and partnerships; and each of and an E-book Retailer under which the publishing are not E-book Retailers. their respective directors, officers, E-book Publisher Sells E-books to G. ‘‘Hachette’’ means Hachette Book managers, agents, and employees. consumers through the E-book Retailer, Group, Inc., a Delaware corporation L. ‘‘Person’’ means any natural which under the agreement acts as an with its principal place of business in person, corporation, company, agent of the E-book Publisher and is New York, New York, its successors and partnership, joint venture, firm, paid a commission in connection with assigns, and its subsidiaries, divisions, association, proprietorship, agency, the Sale of one or more of the E-book groups, and partnerships, and their board, authority, commission, office, or Publisher’s E-books. directors, officers, managers, agents, and other business or legal entity, whether B. ‘‘Apple’’ means Apple, Inc., a employees. private or governmental. California corporation with its principal H. ‘‘HarperCollins’’ means M. ‘‘Price MFN’’ means a term in an place of business in Cupertino, HarperCollins Publishers L.L.C., a agreement between an E-book Publisher California, its successors and assigns, Delaware limited liability company with and an E-book Retailer under which and its parents, subsidiaries, divisions, its principal place of business in New 1. the Retail Price at which an E-book groups, affiliates, partnerships, and joint York, New York, its successors and Retailer or, under an Agency ventures, and their directors, officers, assigns, and its subsidiaries, divisions, Agreement, an E-book Publisher Sells managers, agents, and employees. groups, and partnerships, and their one or more E-books to consumers C. ‘‘Department of Justice’’ means the directors, officers, managers, agents, and depends in any way on the Retail Price, Antitrust Division of the United States employees. or discounts from the Retail Price, at Department of Justice. I. ‘‘Including’’ means including, but which any other E-book Retailer or the D. ‘‘E-book’’ means an electronically not limited to. E-book Publisher, under an Agency formatted book designed to be read on J. ‘‘Macmillan’’ means (1) Holtzbrinck Agreement, through any other E-book a computer, a handheld device, or other Publishers, LLC d/b/a Macmillan, a New Retailer Sells the same E-book(s) to electronic devices capable of visually York limited liability company with its consumers; displaying E-books. For purposes of this principal place of business in New 2. the Wholesale Price at which the E- Final Judgment, the term E-book does York, New York (‘‘Holtzbrinck’’), its book Publisher Sells one or more E- not include (1) an audio book, even if successors and assigns, and its books to that E-book Retailer for Sale to delivered and stored digitally; (2) a subsidiaries, divisions, groups, and consumers depends in any way on the standalone specialized software partnerships, and their directors, Wholesale Price at which the E-book application or ‘‘app’’ sold through an officers, managers, agents, and Publisher Sells the same E-book(s) to ‘‘app store’’ rather than through an e- employees; and (2) Verlagsgruppe Georg any other E-book Retailer for Sale to book store (e.g., through Apple’s ‘‘App von Holtzbrinck GmbH, a German consumers; or Store’’ rather than through its corporation with its principal place of 3. the revenue share or commission ‘‘iBookstore’’ or ‘‘iTunes’’) and not business in Stuttgart, Germany that E-book Retailer receives from the E- designed to be executed or read by or (‘‘VGvH’’), its successors and assigns, book Publisher in connection with the through a dedicated E-book reading and its divisions, groups, and Sale of one or more E-books to device; (3) a media file containing an partnerships, and their directors, consumers depends in any way on the electronically formatted book for which officers, managers, agents, and revenue share or commission that (a)

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00056 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 12929

any other E-book Retailer receives from an E-book Retailer minus the of the agreement, contract, or other the E-book Publisher in connection with commission or other payment that E- document(s) formalizing the joint the Sale of the same E-book(s) to book Publisher pays to the E-book venture or other business arrangement. consumers, or (b) that E-book Retailer Retailer in connection with or that is Within thirty days after Holtzbrinck receives from any other E-book reasonably allocated to that Sale. provides notification of the joint venture Publisher in connection with the Sale of III. Applicability or business arrangement, the one or more of the other E-book Department of Justice may make a Publisher’s E-books. This Final Judgment applies to written request for additional For purposes of this Final Judgment, Holtzbrinck and VGvH, acting information. If the Department of Justice it will not constitute a Price MFN under individually or in concert, and all other makes such a request, Holtzbrinck shall subsection 3 of this definition if Persons in active concert or not proceed with the planned formation Macmillan agrees, at the request of an E- participation with Holtzbrinck or VGvH or material modification of the joint book Retailer, to meet more favorable who receive actual notice of this Final venture or business arrangement until pricing, discounts, or allowances offered Judgment by personal service or thirty days after substantially complying to the E-book Retailer by another E-book otherwise. with such additional request(s) for Publisher for the period during which IV. Required Conduct information. The failure of the the other E-book Publisher provides that A. Within three business days after Department of Justice to request additional compensation, so long as that additional information or to bring an agreement is not or does not result from Macmillan’s stipulation to the entry of this Final Judgment, Macmillan shall action under the antitrust laws to a pre-existing agreement that requires challenge the formation or material Macmillan to meet all requests by the E- notify each E-book Retailer with which modification of the joint venture shall book Retailer for more favorable pricing Holtzbrinck has an agreement relating to neither give rise to any inference of within the terms of the agreement. the Sale of E-books that Holtzbrinck will N. ‘‘Publisher Defendants’’ means no longer enforce any term or terms in lawfulness nor limit in any way the Hachette, HarperCollins, Macmillan, any such agreement that restrict, limit, right of the United States to investigate Penguin, and Simon & Schuster. Where or impede the E-book Retailer’s ability the formation, material modification, or this Final Judgment imposes an to set, alter, or reduce the Retail Price any other aspects or activities of the obligation on Publisher Defendants to of any E-book or to offer price discounts joint venture or business arrangement engage in or refrain from engaging in or any other form of promotions to and to bring actions to prevent or certain conduct, that obligation shall encourage consumers to Purchase one or restrain violations of the antitrust laws. apply to each Publisher Defendant more E-books, except to the extent The notification requirements of this individually and to any joint venture or consistent with Section VI.B of this Section IV.C shall not apply to ordinary other business arrangement established Final Judgment. course business arrangements between by any two or more Publisher B. For each agreement between Holtzbrinck and another E-book Defendants. Holtzbrinck and an E-book Retailer that Publisher (not a Publisher Defendant) O. ‘‘Purchase’’ means a consumer’s contains a Price MFN, Holtzbrinck shall that do not relate to the Sale of E-books acquisition of one or more E-books as a notify the E-book Retailer within three to consumers, or to business result of a Sale. business days after Macmillan’s arrangements the primary or P. ‘‘Retail Price’’ means the price at stipulation to the entry of this Final predominant purpose or focus of which which an E-book Retailer or, under an Judgment that the E-book Retailer may involves: (i) E-book Publishers co- Agency Agreement, an E-book Publisher terminate the agreement with thirty- publishing one or more specifically Sells an E-book to a consumer. days notice and shall, thirty days after identified E-book titles or a particular Q. ‘‘Sale’’ means delivery of access to the E-book Retailer provides such author’s E-books; (ii) Holtzbrinck a consumer to read one or more E-books notice, release the E-book Retailer from licensing to or from another E-book (purchased alone, or in combination the agreement. For each such agreement Publisher the publishing rights to one or that the E-book Retailer has not with other goods or services) in more specifically identified E-book titles terminated within ten days after entry of exchange for payment; ‘‘Sell’’ or ‘‘Sold’’ or a particular author’s E-books; (iii) this Final Judgment, Holtzbrinck shall, means to make or to have made a Sale Holtzbrinck providing technology as soon as permitted under the of an E-book to a consumer. services to or receiving technology R. ‘‘Simon & Schuster’’ means Simon agreement, take each step required services from another E-book Publisher & Schuster, Inc., a New York under the agreement to cause the (not a Publisher Defendant) or licensing corporation with its principal place of agreement to be terminated and not rights in technology to or from another business in New York, New York, its renewed or extended. E-book Publisher; or (iv) Holtzbrinck successors and assigns, and its C. Holtzbrinck shall notify the distributing E-books published by subsidiaries, divisions, groups, and Department of Justice in writing at least another E-book Publisher (not a partnerships, and their directors, sixty days in advance of the formation officers, managers, agents, and or material modification of any joint Publisher Defendant). employees. venture or other business arrangement D. Macmillan shall furnish to the S. ‘‘Wholesale Price’’ means (1) the relating to the Sale, development, or Department of Justice (1) by February net amount, after any discounts or other promotion of E-books in the United 15, 2013, one complete copy of each adjustments (not including promotional States in which Holtzbrinck and at least agreement, executed, renewed, or allowances subject to Section 2(d) of the one other E-book Publisher (including extended on or after January 1, 2012, Robinson-Patman Act, 15 U.S.C. 13(d)), another Publisher Defendant) are between Holtzbrinck and any E-book that an E-book Retailer pays to an E- participants or partial or complete Retailer relating to the Sale of E-books, book Publisher for an E-book that the E- owners. Such notice shall describe the and, (2) thereafter, on a quarterly basis, book Retailer Sells to consumers; or (2) joint venture or other business each such agreement executed, the Retail Price at which an E-book arrangement, identify all E-book renewed, or extended since Macmillan’s Publisher, under an Agency Agreement, Publishers that are parties to it, and previous submission of agreements to Sells an E-book to consumers through attach the most recent version or draft the Department of Justice.

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4703 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2 12930 Federal Register / Vol. 78, No. 37 / Monday, February 25, 2013 / Notices

V. Prohibited Conduct F. Holtzbrinck (and each officer of shall not interfere with the E-book A. Until December 18, 2014, VGvH who exercises direct control over Retailer’s ability to reduce the final Holtzbrinck shall not restrict, limit, or Holtzbrinck’s business decisions or price paid by consumers to purchase impede an E-book Retailer’s ability to strategies) shall not convey or otherwise Holtzbrinck’s E-books by an aggregate set, alter, or reduce the Retail Price of communicate, directly or indirectly amount equal to the total commissions any E-book or to offer price discounts or (including by communicating indirectly Holtzbrinck pays to the E-book Retailer, any other form of promotions to through an E-book Retailer with the over a period of at least one year, in encourage consumers to Purchase one or intent that the E-book Retailer convey connection with the Sale of Holtzbrinck’s E-books to consumers; (2) more E-books. information from the communication to B. Until December 18, 2014, another E-book Publisher or knowledge Holtzbrinck shall not restrict, limit, or Holtzbrinck shall not enter into any that it is likely to do so), to any other impede the E-book Retailer’s use of the agreement with any E-book Retailer that E-book Publisher (including to an officer agreed funds to offer price discounts or any other form of promotions to restricts, limits, or impedes the E-book of a parent of a Publisher Defendant) encourage consumers to Purchase one or Retailer from setting, altering, or any competitively sensitive information, more E-books; and (3) the method of reducing the Retail Price of one or more including: 1. its business plans or strategies; accounting for the E-book Retailer’s E-books, or from offering price 2. its past, present, or future promotional activity does not restrict, discounts or any other form of wholesale or retail prices or pricing limit, or impede the E-book Retailer promotions to encourage consumers to strategies for books sold in any format from engaging in any form of retail Purchase one or more E-books. (e.g., print books, E-books, or audio activity or promotion. C. Holtzbrinck shall not enter into any books); agreement with an E-book Retailer 3. any terms in its agreement(s) with VII. Antitrust Compliance relating to the Sale of E-books that any retailer of books Sold in any format; Within thirty days after entry of this contains a Price MFN. or Final Judgment, Macmillan shall D. Macmillan shall not retaliate 4. any terms in its agreement(s) with designate Holtzbrinck’s general counsel against, or urge any other E-book any author. or chief legal officer, or an employee Publisher or E-book Retailer to retaliate This Section V.F shall not prohibit reporting directly to its general counsel against, an E-book Retailer for engaging Holtzbrinck from communicating (a) in or chief legal officer, as Antitrust in any activity that Holtzbrinck is a manner and through media consistent Compliance Officer with responsibility prohibited by Sections V.A, V.B, and with common and reasonable industry for ensuring Macmillan’s compliance VI.B.2 of this Final Judgment from practice, the cover prices or wholesale with this Final Judgment. The Antitrust restricting, limiting, or impeding in any or retail prices of books sold in any Compliance Officer shall be responsible agreement with an E-book Retailer. After format to potential purchasers of those for the following: the expiration of prohibitions in books; or (b) information Holtzbrinck A. furnishing a copy of this Final Sections V.A and V.B of this Final needs to communicate in connection Judgment, within thirty days of its Judgment, this Section V.D shall not with (i) its enforcement or assignment of entry, to each of Holtzbrinck’s officers prohibit Holtzbrinck from unilaterally its intellectual property or contract and directors, to each of Holtzbrinck’s entering into or enforcing any agreement rights, (ii) a contemplated merger, employees engaged, in whole or in part, with an E-book Retailer that restricts, acquisition, or purchase or sale of in the distribution or Sale of E-books, limits, or impedes the E-book Retailer assets, (iii) its distribution of another E- and to each of VGvH’s officers, from setting, altering, or reducing the book Publisher’s E-books, or (iv) a directors, or employees involved in the Retail Price of any of Holtzbrinck’s E- business arrangement under which E- development of Holtzbrinck’s plans or books or from offering price discounts book Publishers agree to co-publish, or strategies relating to E-books; or any other form of promotions to an E-book Publisher agrees to license to B. furnishing a copy of this Final encourage consumers to Purchase any of another E-book Publisher the publishing Judgment in a timely manner to each Holtzbrinck’s E-books. rights to, one or more specifically officer, director, or employee who E. Holtzbrinck shall not enter into or identified E-book titles or a particular succeeds to any position identified in enforce any agreement, arrangement, author’s E-books. Section VII.A of this Final Judgment; understanding, plan, program, C. ensuring that each person combination, or conspiracy with any E- VI. Permitted Conduct identified in Sections VII.A and VII.B of book Publisher (including another A. Nothing in this Final Judgment this Final Judgment receives at least Publisher Defendant) to raise, stabilize, shall prohibit Macmillan unilaterally four hours of training annually on the fix, set, or coordinate the Retail Price or from compensating a retailer, including meaning and requirements of this Final Wholesale Price of any E-book or fix, an E-book Retailer, for valuable Judgment and the antitrust laws, such set, or coordinate any term or condition marketing or other promotional services training to be delivered by an attorney relating to the Sale of E-books. rendered. with relevant experience in the field of This Section V.E shall not prohibit B. Notwithstanding Sections V.A and antitrust law; Holtzbrinck from entering into and V.B of this Final Judgment, Holtzbrinck D. obtaining, within sixty days after enforcing agreements relating to the may enter into Agency Agreements with entry of this Final Judgment and on distribution of another E-book E-book Retailers under which the each anniversary of the entry of this Publisher’s E-books (not including the aggregate dollar value of the price Final Judgment, from each person E-books of another Publisher Defendant) discounts or any other form of identified in Sections VII.A and VII.B of or to the co-publication with another E- promotions to encourage consumers to this Final Judgment, and thereafter book Publisher of specifically identified Purchase one or more of Holtzbrinck’s maintaining, a certification that each E-book titles or a particular author’s E- E-books (as opposed to advertising or such person (a) has read, understands, books, or from participating in output- promotions engaged in by the E-book and agrees to abide by the terms of this enhancing industry standard-setting Retailer not specifically tied or directed Final Judgment; and (b) is not aware of activities relating to E-book security or to Holtzbrinck’s E-books) is restricted; any violation of this Final Judgment or technology. provided that (1) such agreed restriction the antitrust laws or has reported any

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00058 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 12931

potential violation to the Antitrust anniversary of the entry of this Final W. If at the time information or Compliance Officer; Judgment, a written statement as to the documents are furnished by Macmillan E. conducting an annual antitrust fact and manner of Macmillan’s to the United States, Macmillan compliance audit covering each person compliance with Sections IV, V, and VII represents and identifies in writing the identified in Sections VII.A and VII.B of of this Final Judgment. material in any such information or this Final Judgment, and maintaining all VIII. Compliance Inspection documents to which a claim of records pertaining to such audits; protection may be asserted under Rule F. communicating annually to T. For purposes of determining or 26(c)(1)(G) of the Federal Rules of Civil Holtzbrinck’s employees and to all securing compliance with this Final Procedure, and Macmillan marks each VGvH employees identified in Sections Judgment, or of determining whether pertinent page of such material, VII.A and VII.B of this Final Judgment the Final Judgment should be modified ‘‘Subject to claim of protection under that they may disclose to the Antitrust or vacated, and subject to any legally Rule 26(c)(1)(G) of the Federal Rules of Compliance Officer, without reprisal, recognized privilege, from time to time Civil Procedure,’’ then the United States information concerning any potential duly authorized representatives of the shall give Macmillan ten calendar days violation of this Final Judgment or the Department of Justice, including notice prior to divulging such material antitrust laws; consultants and other persons retained in any civil or administrative G. taking appropriate action, within by the Department of Justice, shall, proceeding. three business days of discovering or upon written request of an authorized receiving credible information representative of the Assistant Attorney IX. Retention of Jurisdiction concerning an actual or potential General in charge of the Antitrust violation of this Final Judgment, to Division, and on reasonable notice to This Court retains jurisdiction to terminate or modify Macmillan’s Macmillan, be permitted: enable any party to apply to this Court conduct to assure compliance with this 1. access during Macmillan’s office at any time for further orders and Final Judgment; and, within seven days hours to inspect and copy, or at the directions as may be necessary or of taking such corrective actions, option of the United States, to require appropriate to carry out or construe this providing to the Department of Justice a Macmillan to provide to the United Final Judgment, to modify any of its description of the actual or potential States hard copy or electronic copies of provisions, to enforce compliance, and violation of this Final Judgment and the all books, ledgers, accounts, records, to punish violations of its provisions. corrective actions taken; data, and documents in the possession, X. No Limitation On Government H. furnishing to the Department of custody, or control of Macmillan, Rights Justice on a quarterly basis electronic relating to any matters contained in this copies of any non-privileged Final Judgment; and Nothing in this Final Judgment shall communications with any Person 2. to interview, either informally or on limit the right of the United States to containing allegations of Macmillan’s the record, Macmillan’s officers, investigate and bring actions to prevent noncompliance with any provisions of employees, or agents, who may have or restrain violations of the antitrust this Final Judgment; their individual counsel present, laws concerning any past, present, or I. maintaining, and furnishing to the regarding such matters. The interviews future conduct, policy, or practice of Department of Justice on a quarterly shall be subject to the reasonable Macmillan. basis, a log of all oral and written convenience of the interviewee and communications, excluding privileged without restraint or interference by XI. Expiration Of Final Judgment or public communications, between or Macmillan. among (1) any of Macmillan’s officers, U. Upon the written request of an Unless this Court grants an extension, directors, or employees involved in the authorized representative of the this Final Judgment shall expire five development of Holtzbrinck’s plans or Assistant Attorney General in charge of years from the date of its entry. strategies relating to E-books, and (2) the Antitrust Division, Macmillan shall XII. Public Interest Determination any person employed by or associated submit written reports or respond to with another Publisher Defendant, written interrogatories, under oath if Entry of this Final Judgment is in the relating, in whole or in part, to the requested, relating to any of the matters public interest. The parties have distribution or sale in the United States contained in this Final Judgment as may complied with the requirements of the of books sold in any format, including be requested. Written reports authorized Antitrust Procedures and Penalties Act, an identification (by name, employer, under this paragraph may, in the sole 15 U.S.C. 16, including making copies and job title) of the author and discretion of the United States, require available to the public of this Final recipients of and all participants in the Macmillan to conduct, at their cost, an Judgment, the Competitive Impact communication, the date, time, and independent audit or analysis relating to Statement, and any comments thereon duration of the communication, the any of the matters contained in this and the United States’ responses to medium of the communication, and a Final Judgment. comments. Based upon the record description of the subject matter of the V. No information or documents before the Court, which includes the communication (for a collection of obtained by the means provided in this Competitive Impact Statement and any communications solely concerning a Section shall be divulged by the United comments and response to comments single business arrangement that is States to any person other than an filed with the Court, entry of this Final specifically exempted from the authorized representative of the Judgment is in the public interest. reporting requirements of Section IV.C executive branch of the United States, Court approval subject to procedures of this Final Judgment, Macmillan may except in the course of legal proceedings set forth in the Antitrust Procedures and provide a summary of the to which the United States is a party Penalties Act, 15 U.S.C. 16 communications rather than logging (including grand jury proceedings), or each communication individually); and for the purpose of securing compliance United States District Judge J. providing to the Department of with this Final Judgment, or as [FR Doc. 2013–04234 Filed 2–22–13; 8:45 am] Justice annually, on or before the otherwise required by law. BILLING CODE P

VerDate Mar<15>2010 17:45 Feb 22, 2013 Jkt 229001 PO 00000 Frm 00059 Fmt 4701 Sfmt 9990 E:\FR\FM\25FEN2.SGM 25FEN2 mstockstill on DSK4VPTVN1PROD with NOTICES2