(CN) - A federal judge on Thursday approved a settlement between the federal government and three leading publishers accused of conspiring with Apple to fix ebook prices.
U.S. District Judge Denise Cote said the settlement order "is directed narrowly towards undoing the price-fixing conspiracy, ensuring that price-fixing does not immediately reemerge, and ensuring compliance."
Hachette, HarperCollins and Simon & Schuster agreed to end their deals with Apple and other ebook retailers. The settlement also bars them from entering similar agreements for two years, and from conspiring or sharing competitively sensitive information with competitors for five years.
They must also abide by a strong antitrust compliance program, which includes a requirement that each publisher notify the Justice Department in advance of any joint ebook ventures and regularly report all communication with other publishers.
The government had sued the settling publishers on April 11, along with Apple, Penguin, Verlagsgruppe Georg von Holtzbrinck and Holtzbrinck's subsidiary, Macmillan. It claimed the publishers conspired to raise ebook prices after determining that Amazon, with its $9.99 ebooks, was unlikely to budge on pricing.
"To effectuate their conspiracy, the publisher defendants teamed up with Apple, which shared the same goal of restraining retail price competition in the sale of ebooks," the lawsuit states.
Instead of $9.99, the defendants allegedly priced new and bestselling books at $12.99, $14.99 or $16.99. Retail ebook prices increased in relation to the hardcover price, according to the complaint.
The government said the conspiracy caused consumers to pay "tens of millions of dollars more for ebooks than they otherwise would have paid."
Members of the public were given 60 days to comment on the proposed settlement. When those 60 days ended on June 25, 868 comments had been submitted from a variety of interested people and groups, including booksellers, authors, literary agents and consumers. Comments were also received by Apple, Barnes & Noble, the Authors Guild and RoyaltyShare CEO Bob Kohn, who submitted a five-page cartoon as his amicus brief.
Negative comments fell into four categories of arguments, each of which Cote addressed.
She said industry players need to "play by the antitrust rules," and it's not up to courts to protect bookstores and independent publishing houses "from the vicissitudes of a competitive market."
Cote also dismissed fears that the settlement is too sweeping, saying it "cannot be fairly characterized as either 'overbroad' or 'over-regulatory'" because it's limited in time (with two- and five-year bans) and to the settling parties.
She said the government's "detailed allegations and explanations provide ample factual foundation" for the settlement, despite concerns that the government's conclusions were not rooted in fact.
Finally, she rejected the claim that the allegedly collusive behavior had significant "pro-competitive" effects, such as limiting Amazon's monopoly.
"Even if Amazon was engaged in predatory pricing, this is no excuse for unlawful price-fixing," Cote wrote (emphasis in original).
Last month Hachette, HarperCollins and Simon & Schuster agreed to pay $69 million to settle a similar antitrust lawsuit filed by 49 states and five territories.
In that settlement, they agreed to reimburse customers who paid artificially high prices for ebooks between April 1, 2010 and May 12, 2010.