It looks like 2012 is shaping up to be an interesting year for publishers and the agency model. With multiple class action lawsuits filed this summer against publishers over the 2010 switch to the agency model (some also including Amazon and Barnes & Noble), the matter has been referred to the U.S. Judicial Panel on Multidistrict Litigation (MDL Panel) to coordinate and consolidate the cases, either in New York or Northern California. According to Barnes & Noble's quartlerly filing with the SEC, the MDL Panel met on December 1, 2011, and the deadline for filing motions to dismiss has been extended until after the complaints have been consolidated, and an amended complaint is filed in the case’s new jurisdiction.
Within weeks this summer, three suits, were filed in Manhattan, and two suits were filed in California, including the original suit, filed August 9, by firm Hagens Berman. The suits all allege that the simultaneous introduction of the agency model by the major publishers reflects an illegal conspiracy to "artificially inflate" e-book prices, and to effectively end "retailer discretion" for e-book pricing.
According to the filings, the price fixing conspiracy occurred as Apple negotiated terms with publishers in anticipation of the 2010 iPad release. On January 27, 2010, when asked by reporters how Apple's e-bookstore would compete with Amazon's $9.99 price, Apple’s Steve Jobs responded that the prices "would be the same." That public pronouncement, one suit alleges, "was a signal to Publisher Defendants that each of them had agreed to join the conspiracy." The following day, January 28, Macmillan CEO John Sargent told Amazon of its switch to the agency model. "This would have been irrational if Macmillan had not expected its primary competitors to follow suit," one lawsuit notes. "Acting alone, no individual publisher would be able to sustain the supra-competitive prices."
Meanwhile, the U.S. Department of Justice Department this week confirmed that it is following suit with the European Union, confirming that it too is looking into e-book pricing. In a statement to the public, Sharis Pozen said the Justic Department is "investigating the electronic book industry, along with the European Commission and the states’ attorneys general."
