While all attention was turned to Amazon’s new Kindle announcements, in New York there was a potentially even more significant development in the ebook world: Judge Denise Cote approved the settlement between Hachette, Simon & Schuster and Harper Collins, and the US Department of Justice (DOJ), in the high-profile ebook price-fixing case.
These three publishers must now end their contracts with Apple within one week, and they must also terminate any contracts with other retailers that contain the so-called ‘most favored nation’ clause. They must also undertake to not enter into contracts that restrict the retailer’s discretion over pricing for the next two years, and not to enter into contracts that contain the ‘most favored nation’ clause for the next five years.
To recap: the ‘most favored nation’ clause means that no other retailer is allowed to sell certain ebooks for a lower price.
The judge’s decision is hardly a surprise, despite opposition from a number of quarters. She noted that anti-trust legislation is designed to protect consumers, not to protect struggling competitors in a market, and she argued that there was no proof that Amazon had engaged in predatory pricing. The DOJ has said that it is pleased with the judge’s ruling. Penguin, Macmillan and Apple, meanwhile, have still declined to settle, and a trial is expected in the case next summer. Amazon reportedly declined to comment on the news.