E-books settlement begins $400 million payout

Staff Reports • Updated Jul 6, 2016 at 1:00 PM

Tennessee Attorney General Herbert H. Slatery III announced last week that Tennessee residents who bought electronic books could begin receiving account credits or checks this week. 

Payments are the result of the successful prosecution of a price-fixing case against Apple, Inc. in 2013.

Tennessee joined a group of 33 states, led by Connecticut and Texas, in investigating and prosecuting Apple for its participation in the conspiracy to artificially inflate E-book prices. Apple is obligated to pay $400 million in nationwide consumer compensation after the U.S. Supreme Court denied Apple’s request to review a lower court’s finding that the company violated antitrust laws.

“Returning the hard-earned money of Tennessee consumers was the primary goal in this litigation,” Slatery said. “I appreciate the hard work of our office, along with our colleagues in other states, to make certain all companies compete fairly and play by the same rules.”

 In June 2013, the states, along with the U.S. Department of Justice, tried the case against Apple. A month later, the U.S. District Court for the Southern District of New York ruled that Apple conspired with five major U.S. publishers – Penguin Group (USA), Inc. (now Penguin Random House); Holtzbrink Publishers LLC d/b/a Macmillan; Hachette Book Group Inc.; HarperCollins Publishers LLC; and Simon & Schuster Inc. – to raise the retail prices of E-books. In June 2015, the U.S. Court of Appeals for the Second Circuit affirmed that ruling. 

And in March, the U.S. Supreme Court denied Apple’s request to review the Second Circuit’s decision. Under a contingent settlement agreement between the states and Apple, the Supreme Court’s decision triggered Apple’s obligation to pay the maximum consumer compensation amount of $400 million.

 All five of the conspiring publishers settled prior to trial, paying a total of about $166 million in nationwide consumer compensation. Most of that money was distributed to consumers in March 2014. The current distribution will consist of the $400 million Apple payment and any remaining funds from the publisher settlements. The $566 million total nationwide compensation to consumers is more than twice the estimated amount of actual damages.

 Tennessee consumers account for about 2 percent of E-book purchases, and are expected to receive about $8.5 million from the distribution, in addition to the nearly $2.9 million already paid to Tennesseans. The amounts received by E-book purchasers will be based on the number of E-books purchased between April 1, 2010 and May 21, 2012. For each E-book that was a New York Times bestseller, consumers will receive $6.93. For all other books, the payment will be $1.57.

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