Announcing the lawsuit at a press conference in Washington, D.C., on Wednesday, U.S. Attorney-General Eric Holder described shadowy back-room meetings, where Apple would each quarter get together with publishers to discuss "confidential competitive matters" and set the prices of their ebooks.
Holder said: "Beginning in the summer of 2009, we allege that executives at the highest levels of the companies included in today's lawsuit – concerned that ebook sellers had reduced prices – worked together to eliminate competition among stores selling ebooks, ultimately increasing prices for consumers. As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles."
"Our investigation even revealed that one CEO allegedly went so far as to encourage an ebook retailer to punish another publisher for not engaging in these illegal practices."
Holder also defined the terms of the settlement, which would require the publishers "to grant retailers – such as Amazon and Barnes & Noble – the freedom to reduce the prices of their ebook titles."
The complaint, which was filed by the Antitrust Division of the U.S. Department of Justice, read: "Apple facilitated the publisher defendants' collective effort to end retail price competition by coordinating their transition to an agency model across all retailers."
With Apple's iBookstore, ebook authors and sellers must hand over a 30% cut of each sale. Under this system, known as the "agency model", publishers, rather than vendors, set the prices, giving Apple and the publishers an incentive to charge more.
The lawsuit reads: "As a result of discussions with the publisher defendants, Apple learned that the publisher defendants shared a common objective with Apple to limit ebook retail price competition, and that the publisher defendants also desired to have popular ebook retail prices stabilize at levels significantly higher than $9.99.
"Together, Apple and the publisher defendants reached an agreement whereby retail price competition would cease (which all the conspirators desired), retail ebook prices would increase significantly (which the publisher defendants desired), and Apple would be guaranteed a 30% 'commission' on each ebook it sold (which Apple desired)."
Amazon's pricing model, by contrast, gives ebook authors and sellers greater flexibility to price what they like for their work.
Intellpuke: You can read this article by Guardian U.S. News Editor Brian Braiker in context here: www.guardian.co.uk/technology/2012/apr/11/apple-accused-fixing-prices-ebooks