Book 'em, Danno —

Macmillan, sole e-book publishing holdout, settles with Justice

CEO says maximum damage "was much more than the entire equity of our company.”

Back in December, Penguin became the penultimate publisher to settle with the United States Department of Justice (DOJ) in the alleged e-book price-fixing scheme. On Friday, Macmillan and the DOJ came to a settlement agreement, leaving only Apple in the government’s sights.

Macmillan has agreed to other sales restrictions, including a prohibition until December 2014 on entering into new discounting agreements for e-book titles. As others who have agreed to similar settlements, Macmillan must regularly report to the DOJ on future e-book ventures and any communications it has with its rivals.

“As a result of today’s settlement, Macmillan has agreed to immediately allow retailers to lower the prices consumers pay for Macmillan’s e-books,” said Jamillia Ferris, chief of staff and counsel at the Department of Justice’s Antitrust Division, in a statement. “Just as consumers are already paying lower prices for the e-book versions of many of Hachette’s, HarperCollins’ and Simon & Schuster’s new releases and bestsellers, we expect the prices of many of Macmillan’s e-books will also decline.”

The DOJ still has an ongoing case against Apple—a trial date has been set for June 2013.

Why did Macmillan hold out for so long? In a letter posted (PDF) to the company’s website on Friday, John Sargent, the company’s CEO, wrote that the settlement’s e-book discounting “would be harmful to the industry,” and after all the others had capitulated to the DOJ, “our business would have a pricing disadvantage for two years.”

Further, Sargent insists the company was in the right all along.

“I had an old fashioned belief that you should not settle if you have done no wrong,” he wrote. “As it turns out, that is indeed old fashioned. Our company is not large enough to risk a worst-case judgment. In this action the government accused five publishers and Apple of conspiring to raise prices. As each publisher settled, the remaining defendants became responsible not only for their own treble damages, but also possibly for the treble damages of the settling publishers (minus what they settled for). A few weeks ago I got an estimate of the maximum possible damage figure. I cannot share the breathtaking amount with you, but it was much more than the entire equity of our company.”

Channel Ars Technica