Apple’s Faces Antitrust Lawsuit in Canada

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Set to face an antitrust lawsuit from the United States Department of Justice, Apple is also tied up in litigation in Canada. If the Cupertino-based company is found guilty of eBook price fixing, Canadians who bought an eBook from Apple on or after April 1, 2010 are likely to be partially recompensed. That is according to Normand Painchaud, the lawyer who first filed the suit in Quebec Superior Court last February.

Apple’s eBook Price-Fixing Issues

A couple of weeks ago, the US Department of Justice filed an antitrust lawsuit in the New York District Court against Apple and a number of book publishers with regards to their eBook pricing. The action is due to the company’s alleged role in convincing publishers to switch to an “agency model” method for partnering with an online marketplace, rather than the “wholesale model” that Amazon implements in its Kindle Store.

But according to biographer Walter Isaacson, the late Apple CEO Steve Jobs said that publishers were disappointed with Amazon’s method because it has screwed them up. Under the online retailer’s model, they would buy the books from the publishers at a wholesale price, and then offer them using their own rate. Apparently, Amazon keeps selling their copies at a loss. Thus, publishers decided to partner with Apple and adopt their sales model.  Of the partnership with publishers, Jobs said:

“We told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that’s what you want anyway.’ But we also asked for a guarantee that if anybody else is selling the book cheaper than we are, then we can sell them at a lower price too. So they went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you books.’”

The Illegal eBook Price Increase

The DoJ’s lawsuit is similar to what Painchaud filed in the Quebec Superior Court. The lawsuit claims that Apple and five large publishing houses illegally worked together to raise eBook pricing. He also said that this is the first of three court cases to move forward in Canada. The other requests were filed in Ontario and British Columbia, and are still waiting for approval.

The Quebec class-action suit was filed under the name of Antoine Pontbriand, and states the following:

“The anti-competitive nature of this conspiracy, and the Publisher Respondents’ motivation to control eBook pricing, is also revealed by the fact that the price of an eBook in many cases now approaches—or even exceeds—the price of the same book in paper even though there are almost no incremental costs to produce each additional eBook unit.”

While Apple is seeking to fight allegation from the US Federal Court, they haven’t commented on the new Canadian suit. On the other hand, publishers HarperCollins, Simon & Schuster and Hachette have already settled their cases with the US DoJ.

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