Apple Now Stands Alone in E-Book Case

Apple (NASDAQ:AAPL) is now the only one left fighting with the U.S. Justice Department in the e-book antitrust case after publisher Macmillan reached a settlement with the agency on Friday. Macmillan was the last of five major publishers to settle the suit filed by the Justice Department last April. This leaves Apple as the only remaining defendant in the case scheduled to start hearing in June.

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While HarperCollins (NASDAQ:NWSA), Simon & Schuster (NYSE:CBS), and Hachette settled immediately, Penguin (NYSE:PSO) came to an agreement with the agency in December.

The DoJ has alleged that the five publishers and Apple colluded to raise e-book prices from Amazon.com’s (NASDAQ:AMZN) standard $9.99 price. According to the allegations, prices of bestsellers rose to $12.99 and $14.99 after Apple stepped in, thus hurting consumer interests. The publishers and Apple denied the allegations. Amazon is largely cited as the big winner in the whole scenario.

According to Friday’s settlement, Macmillan will have to allow e-book retailers to discount its titles within three business days of agreeing to the settlement, even if it has not made new contracts. The discounts will be in place for 23 months starting from December 18, 2012, the day on which Penguin settled. The terms still have to approved by a court after the completion of a 60-day comment period.

Macmillan chief executive John Sargent said in a statement addressed to authors, illustrators, and agents that his company was forced to settle “because the potential penalties became too high to risk even the possibility of an unfavorable outcome.”

“Our company is not large enough to risk a worst case judgment,” he said. “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,” he said.

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Sargent reiterated that Macmillan had not done anything wrong and added that the settlement did not include an admission of guilt.

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