It's time to drop dime, says the U.S. government.
The U.S. Department of Justice want three of the five book-publishing houses accused of participating in a price-fixing scheme with Apple to start turning over evidence against their alleged co-conspirators, court documents show.
In April, the U.S. Department of Justice accused five of the country's six largest book publishers of conspiring with Apple to raise prices on e-books. The government alleges that the co-conspirators forced e-book retailers, such as Amazon, to adopt a new business model, one that would enable the publishers to snatch control of e-book pricing away from retailers.
Of the five publishers accused of participating, three settled: Lagardere SCA's Hachette Book Group, News Corp.'s HarperCollins Publishers, and Simon & Schuster (owned by CBS, which publishes CNET). The two publishers who refused to settle and deny the allegations are Macmillan Publishers (owned by Germany's Verlagsgruppe Georg von Holtzbrinck holding company), and Pearson PLC's Penguin Group. Apple has also denied any wrongdoing and is fighting the DOJ.
The antitrust case could go a long way toward shaping the burgeoning e-book sector. Retailers such as Barnes & Noble say the agency model helps them battle against Amazon's predatory pricing. But the agency model forced book prices up and according to the statements Apple CEO Steve Jobs made to his biographer, that's exactly what Apple and the publishers wanted when they all agreed to adopt the model.
These three publishers that settled now want to be allowed to walk away from the case entirely, according to documents filed yesterday by the DOJ. The publishing companies that have settled have asked federal district court in New York that they be treated as "non parties" so they can avoid being required to provide discovery in the case unless a party provides "good cause," the government said in a letter to Judge Denise Cote.
The DOJ said the publishers aren't entitled to "special treatment" because it wasn't included in their settlement agreement. In addition, the government said these companies are likely to be in possession of important information.
"This is, after all, a conspiracy case in which the settling defendants are alleged co-conspirators," DOJ lawyers said in their documents. "There is, therefore, no remotely plausible argument that they are not likely to be sources of highly relevant evidence."
DOJ lawyers even gave examples of what they want. They claim that Hachette, HarperCollins, and Simon & Schuster have not turned over documents to them that they did provide to European regulators, who are also investigating Apple and the publishing companies for price fixing.
"Immunizing the settling defendants from further discovery may result in those documents never coming to light," the DOJ wrote, "and may thwart efforts to obtain testimony from European-based conspirators, not to mention testimony from U.S. personnel."
Don't look for this one to end anytime soon. There is disagreement between most of the parties on how long the discovery process should last. Apple wants a deadline of December 7 but the DOJ and the publishers say they need more time. The government says a much more realistic deadline is March 22.