Ebook buyers to see $400 million of refunds from Apple – Yahoo Finance

8 months ago Comments Off on Ebook buyers to see $400 million of refunds from Apple – Yahoo Finance

Buyers of electronic books can expect refunds totaling some $400 million soon, as Apple (AAPL) on Monday lost a bid to have the Supreme Court review a ruling that it conspired with book publishers to raise prices.

Apple made a deal two years ago that it would pay refunds of $400 million to consumers as part of a $450 million settlement if it ultimately lost the case, with the other $50 million covering legal fees. Those payments would come on top of $166 million paid back to consumers by major publishers that previously settled.

Most consumers will receive automatic credits in the accounts where they bought ebooks that can be applied to future purchases, the Justice Department said in a statement.

The original case charged that Apple conspired with major publishers in 2010 to force Amazon.com (AMZN) to cede control over ebook pricing so the publishers could raise prices on best-sellers and other popular titles higher than the $9.99 Amazon favored. Ebook prices immediately rose to $12.99 and $14.99 for best sellers at Amazon, Barnes & Noble (BKS),Apple’s new iBooks Store and other outlets.

The publishers, Hachette Book Group, a unit of French media company Lagardère, New Corp’s (NWSA) HarperCollins, Penguin Group, Macmillan and CBS’s (CBS) Simon & Schuster all settled before trial. But Apple decided to fight the charges, losing its case at the district court level in 2013 and in the Second Circuit Court of Appeals last June.

“Apple’s liability for knowingly conspiring with book publishers to raise the prices of ebooks is settled once and for all,” Assistant Attorney General Bill Baer said in a statement.  “And consumers will be made whole.”

The Supreme Court disclosed without comment on Monday that it had voted not to hear Apple’s appeal. Four justices must agree to hear an appeal, a high bar as the court has only eight members currently.

Apple shares lost 1% in morning trading on Monday. The shares have declined 20% over the past year.

Prices for the most popular ebooks are currently well above the $9.99 level currently, despite the government’s successful lawsuits. For example, Amazon is selling “All the Light We Cannot See,” Anthony Doerr’s best-selling novel, for $13.99 and journalist Eric Weiner’s non-fiction ebook, “The Geography of Genius,” is $12.99.

When the major publishers settled in 2012, Amazon regained control of most ebook prices via court order, but in subsequent negotiations, publishers recaptured the upper hand and raised prices again. That’s led to a drop in ebook sales over the past few years. Big publishers revenue from ebook sales dropped 11% in the first 10 months of 2015 from the same period in 2014, according to a report from the Association of American Publishers.

The 2013 trial before U.S. District Judge Denise Cote offered a rare behind-the-scene glimpse into Apple’s negotiating tactics. Apple was about to unveil the orginal iPad as it tried to entice major publishers to sign o for its new ebook store that would compete with Amazon. One part of Apple’s offer was to help publishers find a way to raise prices.

Jobs, in an email to James Murdoch, son of News Corp CEO Rupert Murdoch, made the terms fairly blunt. “Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99,” Jobs wrote.

Ebook buyers to see $400 million of refunds from Apple – Yahoo Finance}