LONDON--Pearson PLC's book publishing business, Penguin Group,
has agreed to pay $75 million to settle a dispute in the U.S. over
the way it priced electronic books, drawing to a close an
investigation into the publishing industry's e-book pricing
tactics.
In a brief statement Wednesday, Pearson said that Penguin has
reached a "comprehensive agreement with the U.S. State Attorneys
General and private class plaintiffs to pay $75 million in consumer
damages plus costs and fees to resolve all antitrust claims
relating to e-book pricing."
In anticipation of reaching the agreement, Pearson said it made
a $40 million provision for settlement in its 2012 financial
accounts. An "incremental charge" will be expensed in Pearson's
2013 financial results as part of the accounting for the Penguin
Random House joint-venture. A Pearson spokesman declined to provide
the specific figure.
The agreement follows similar deals with the European Union and
the U.S. Justice Department.
In April, Penguin offered to scrap its deal with Apple Inc. over
the sale of e-books in an effort to end an antitrust probe by
European regulators. Penguin was the final holdout in the case
after other publishers, and Apple itself, settled with Brussels
last December.
The European Commission launched formal proceedings at the end
of 2011 alleging that Apple and five publishers had illegally
colluded to fix the price of e-books ahead of Apple's first iPad
launch in 2010.
Before the iPad, publishers would set a wholesale price and a
suggested higher cover price for e-books, which retailers were free
to discount. But Amazon.com Inc., seeking to promote its Kindle
e-book reader, launched heavy price cuts on new best sellers,
sending shock waves through the marketplace.
Apple offered publishers a new way to price their books that
allowed them to set the final e-book price themselves and give
Apple a 30% cut for selling the books through its iBookstore. The
five publishers signed on with Apple and then imposed a new sales
process on Amazon, effectively banning it from discounting.
The U.S. Justice Department and the European Commission filed
antitrust proceedings against Apple and publishers Hachette,
HarperCollins, Simon & Schuster and Penguin, accusing them of
colluding to raise the price of e-books. Hachette, HarperCollins
and Simon & Schuster agreed to settle the cases without
admitting wrongdoing. Penguin settled the U.S. case in
December.
Vanessa Mock in Brussels contributed to this article.
Write to Lilly Vitorovich at lilly.vitorovich@dowjones.com
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