The suit

Paul Aiken, executive director of the Author's Guild, on the proposed settlement:

I’m writing to express the Authors Guild’s firm belief that the proposed settlement of the Justice Department’s lawsuit alleging that five publishers and Apple colluded to introduce agency pricing to the e-book market is not in the public interest.  The settlement is flawed by an astonishing provision, specifically requiring three large publishers to allow e-book vendors to routinely sell e-books at below cost, so long as the vendors don’t lose money over the publisher’s entire list of e-books over the course of a year.

The proposal, by allowing targeted predatory pricing of e-books, would give governmental sanction to a practice long considered destructive to a free and fair market. It was precisely this practice – selling frontlist e-books at below cost to discourage and destroy competition – that helped Amazon capture a commanding 90% of the U.S. e-book market. Agency pricing, which the Justice Department believes was introduced through collusion, has allowed Amazon’s competitors to gain a foothold, driving Amazon’s market share down to 60% in two years.

The Justice Department has made clear that it intends to irreversibly reshape the literary market.  Allowing Amazon to resume its predatory ways with e-books will likely accomplish that, but not in the way the Justice Department intends.  The proposed settlement will almost certainly backfire and harm readers in the long run.

Full letter to the Justice Department.