The U.S. Department of Justice (DOJ) filed a civil antitrust action against Apple and five major book publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster (Publisher Defendants) – for violations of Section 1 of the Sherman Act. The DOJ seeks “to enjoin the Publisher Defendants and Apple from further violations of the nation’s antitrust laws and to restore the competition that has been lost due to the Publisher Defendants’ and Apple’s illegal acts.” (Complaint pdf page 5). This lawsuit attacks the legality of the “agency model,” as implemented by Apple and the Publisher Defendants.
Alleged facts. Technology has transformed the book publishing industry. E-books, books in electronic form, are much cheaper to produce and distribute than print books (e.g., reduced manufacturing and distribution expenses, no warehousing and unsold stock expenses). E-books benefit consumers by allowing them to read books on various electronic devices, by providing consumers with around the clock access to products, by enabling easier portability and storage and by allowing consumers to adjust font size.