The DOJ charged Apple Inc. (NASDAQ:AAPL) and the five publishers with fixing e-book prices higher to force Amazon.com Inc. (NASDAQ:AMZN) to raise its e-book prices to make the marketplace more competitive. The way this happened, the DOJ claims, is that Apple Inc. (NASDAQ:AAPL) wanted to build up its Markeplace of e-books by convincing the publishers to take on an “agency” pricing model, in which the publishers controlled the price of their e-books, rather than letting the retailers dictate their prices – also known as the “wholesale” model. This went on, allegedly, from April 2010 through May of this year.
While Amazon.com Inc. (NASDAQ:AMZN) was not directly involved in the lawsuit, the (alleged) price-fixing forced the online retailer to hike its e-book prices above where it would have sold them had it had more control. Therefore, Amazon.com Inc. (NASDAQ:AMZN) has started to e-mail e-book customers to let them know that each e-book customer will receive from 30 cents to $1.32 per each e-book title purchased during the two-year period mentioned in the settlement. Three of the publishers – Simon & Schuster, HarperCollins and Hatchette Book Group – have agreed to the terms of the settlement and will be offering similar refunds. The three publishers will produce a $69 million fund out of which to issue the refunds, while Amazon.com Inc. (NASDAQ:AMZN) will pay the refunds out of its own cash. This may come across as a quality customer-service effort by Amazon.com Inc. (AMZN) which may help investor sentiment in the company – especially stock holders like billionaire fund manager Ken Fisher of Fisher Asset Management.
By the way, the settlement is not official until court approval in February, but Apple Inc. (NASDAQ:AAPL) and the other two publishers in the lawsuit – Macmillan and Penguin – are fighting their involvement in the case and are scheduled to go to court to fight the settlement in June of next year.
