Pearson PLC Settles E-Books Case For $75 Million

Posted May 22, 2013

The Penguin division of Pearson PLC (NYSE:PSO) has announced today that they will be paying $75 million in damages along with costs and fees as part of a settlement with the United States government over an alleged price-fixing scheme related to the e-book market.  Pearson is taking an extra provision on their accounts this year after setting aside $40 million in 2012.  The company already reached an agreement with the Justice Department in the e-book case, but the latest deal settles the case with individual states in the U.S.

Last year, the Justice Department accused Apple and five e-book publishers of price collusion as a way to compete against’s e-book marketplace. The five publishers that were involved in that case included Simon & Schuster, Hachette Book Group, Penguin Group (USA), Macmillan, and HarperCollins Publishers Inc.

The book publishers did not like that was selling some of the best sellers for $9.99 to encourage consumers to buy the Kindle.  The publishers feared that this model would lead to consumers getting accustomed to buying books for cheap.

Pearson denied any wrongdoing in the past in terms of e-book pricing, but they decided to settle so that they could move forward with the Random House merger.  That merger was announced this past October.

Penguin also said that they committed to the state attorneys to abide by the terms agreed upon with the Justice Department.