Ebook publishers continue to pay a steep price in settling actions alleging that prices were elevated well above what a truly competitive market would have determined. With ebook prices of as much as $12 or $15 – far above the marginal cost plus modest profit that standard economic theory predicts of competitive markets – three publishers have already agreed to substantial settlements: Hachette, $31.7 million; HarperCollins, $19.5 million, and Simon & Schuster, $17.7 million.
Now, Penguin has agreed to the largest such settlement, more than twice that of the Hachette settlement: $75 million to resolve claims brought by state attorneys general, after having earlier settled with the U.S. Department of Justice. Specifically, the settlement provides that Penguin will refund $75 million to consumers through credits to buy Penguin books through online retailers. Penguin’s parent company, Pearson PLC, has anticipated the settlement by way of a $40 million accounting charge, reflecting that the actual cost to Penguin is likely to be considerably less than the $75 million proffered.