DOJ Urges Court to Enter Final Judgment in E-Book Settlement

On Wednesday, August 22, the Department of Justice (DOJ) filed a reply memorandum with the U.S. District Court for the Southern District of New York in which it dismissed arguments made in the latest round of filings regarding the proposed e-book pricing settlement with Hachette, HarperCollins, and Simon & Schuster. Countering arguments made by Apple, Penguin, and Macmillan, the defendants in the case that have chosen not to settle, and in an amicus brief from the American Booksellers Association and Barnes & Noble, DOJ asked the court to enter the proposed final judgment without further hearing.

Under the proposed consent decree, the three settling publishers would be forced to terminate their current agency agreements. The decree also restricts the publishers from entering similar agency agreements for two years.

Holding to its position that “unmistakable consumer harm” resulted from a “conspiracy in this case,” DOJ said that the arguments submitted by the defendants that have chosen not to settle “have no basis in law” and “delay the restoration of competition.”

Regarding the amicus filing by ABA and B&N, DOJ said that it would address “the only new argument offered: that the volume of comments opposed to entry of the decree demonstrates that it is not in the public interest.” 

DOJ called on the court to “reject the suggestion that the ‘public interest’ is determined by the ability of interested parties to muster the largest number of comments in a Tunney Act proceeding,” adding that it was not “unprecedented for parties to oppose a settlement because they have a stake in an anticompetitive status quo.”

“To dismiss the volume of Tunney Act submissions as being irrelevant because information about how to submit such comments was provided to our members is astounding,” said ABA CEO Oren Teicher. “There has been an unprecedented outpouring of sentiment in opposition to the proposed settlement, and it has come from a whole spectrum of individuals and groups involved in the book industry and beyond. DOJ’s belief that this case will restore competition and correct harm done to the consumer is totally misguided. What it will, in all likelihood do, is foster a monopoly in e-book sales, and consumers will be the ones who will wind up paying the consequences.”

In their July 31 amicus filing, ABA and Barnes & Noble stressed that elimination of the agency model for e-books would injure innocent third parties, including ABA member bookstores, Barnes & Noble, authors, and non-defendant publishers; hurt competition in an emerging industry; and ultimately harm consumers. “The end loser of this unnecessary and burdensome regulatory approach will be the American public, who will experience higher overall average e-book and hardback prices and less choice,” the filing said. It also noted that of the 868 public comments received by the Department of Justice more than 90 percent opposed the proposed consent decree.