Amazon, Apple probed for e-book price fixing

ipad_vs_kindle.top.jpg By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com -- In the e-book price wars, Apple and Amazon might be enjoying an unfair advantage, Connecticut's Attorney General Richard Blumenthal said Monday as he announced an investigation of their contracts with book publishers.

Blumenthal fired off letters to each company requesting that their attorneys schedule a meeting with his office to discuss their deals with five of the largest e-book publishers in the U.S.: Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin.

Both Amazon (AMZN, Fortune 500) and Apple (AAPL, Fortune 500) have agreements with those publishers that ensure they'll receive the best prices for e-books over any of their competitors, Blumenthal said in a prepared statement.

Those agreements -- dubbed "most favored nation" clauses -- block the publishers from offering deeper discounts to competitors than they do to Amazon and Apple. While such deals aren't straight-out illegal under antitrust laws, they're also not always legal either, Blumenthal said in his letters.

"The concerns are compounded, and hence potentially more troublesome, since this arrangement appears to be something that will be agreed to by the largest e-book publishers in the United States and two competitors who combined will likely command the greatest retail e-book share," Blumenthal wrote.

To Apple, he added: "If recent history is a predictor of future results, I fully expect that Apple's iPad tablet will soon attract (if it has not already) an important share of the e-reading device market."

Blumenthal said his office surveyed e-book prices for several bestsellers offered by Amazon and Apple, as well as competitors Borders Group (BGP) and Barnes & Noble (BKS, Fortune 500), and found prices were identical across all four companies.

"These agreements among publishers, Amazon and Apple appear to have already resulted in uniform prices for many of the most popular e-books -- potentially depriving consumers of competitive prices," Blumenthal said in a statement.

Uniform pricing is becoming less common, however, since Apple and Amazon adopted the so-called "agency model" earlier this year with several major publishers. That system allows publishers to set the price for their books -- and many are pushing for rates higher than the $9.99 Amazon tried for years to make the industry standard for new e-book releases.

But Amazon still typically offers new releases for lower rates than its rivals. For example, its current bestselling new release book -- Suzanne Collins' Mockingjay, due out in late August -- is priced at $8.45 for a Kindle e-book. that e-book is priced at $9.99 on Barnes & Noble's website.

Apple and Barnes & Noble declined to comment. Amazon did not immediately respond to requests for comment.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,416.85 225.48 1.31%
Nasdaq 4,683.41 45.41 0.98%
S&P 500 2,021.25 19.09 0.95%
Treasuries 1.75 0.00 0.00%
Data as of 8:23am ET
Company Price Change % Change
Apple Inc 118.90 3.59 3.11%
Bank of America Corp... 15.43 0.23 1.51%
Yahoo! Inc 43.73 -2.73 -5.88%
Microsoft Corp 42.01 0.82 1.99%
Facebook Inc 78.00 1.76 2.31%
Data as of Jan 29

Sections

Shake Shack is a huge success in New York. But will the 'fine casual' burger and fries joint be a big hit with investors too? It looks like Wall Street has worked up its appetite for the Shake Shack IPO. More

The Wednesday announcement that Don Thompson will retire as CEO of McDonald's leaves just two black CEOs in the elite Dow 30. More

Google reported a quarterly profit on Thursday that rose from a year ago, but the company fell short of Wall Street's expectations. More

On demand delivery startup WunWun is expecting its order volume to double by the time they close up shop on Monday. All thanks to a blizzard. More

The IRS said it has carried out thousands of audits of offshore schemes and pursued criminal charges that have resulted in "billions of dollars in criminal fines and restitutions." And it won't stop there. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.