By David Ingram and Diane Bartz
WASHINGTON, Dec 18 (Reuters) - The U.S. Justice Department
said on Tuesday it has reached a settlement with Pearson Plc's
Penguin Group in the government's investigation of alleged
price-setting in the e-book market.
The Justice Department had accused Apple and five publishers
in April of illegally colluding on prices as part of an effort
to fight Internet retailer Amazon.com Inc's dominance of
e-books.
Apple is accused of convincing the five publishers to use the
"agency model," that allows publishers to set the price of
e-books, and in turn Apple would take a 30 percent cut.
Hachette, HarperCollins and Simon & Schuster opted to settle
with the Justice Department in April but Apple, Penguin and
MacMillan said they would fight the allegations.
News Corp. owns HarperCollins Publishers Inc, CBS Corp owns
Simon & Schuster Inc and Lagardere SCA owns Hachette Book Group.
Macmillan is a unit of Verlagsgruppe Georg von Holtzbrinck GmbH.
Many people in the book publishing and selling industry
accuse Amazon of deeply discounting books to sell them below
cost in order to drive other e-book sellers out of business, and
then raise prices.
Under the terms of the settlement announced on Tuesday,
Penguin will drop any agreements with Apple and other e-book
sellers that prevent price discounting. It will not be allowed
to reinstate the deals for two years.
The settlement terms were similar to ones that the Justice
Department reached with the other three publishers in April.
The impetus for the settlement could well be a joint venture
of Penguin and Random House announced in October by Penguin
owner Pearson's and Random House owner Bertelsmann.
That deal is also aimed at gaining the upper hand in the
publishers' relationship with Amazon and Apple.
The publisher settlements with the Justice Department have
been unpopular with bookseller Barnes & Noble Inc and the
American Booksellers Association, which represents independent
stores. Both have argued the settlements would strengthen
Amazon's dominance.
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