Connecticut AG Looking Into e-Book Pricing

Back on June 2, I reported here that Texas Attorney General Greg Abbott's office was looking into the possibility that the large publishers were stepping across a legal line when it came to e-book pricing.

On the same day I did that post, Jeffrey A. Trachtenberg did an article in the Wall Street Journal here. He said:

State antitrust authorities tend to be overshadowed by their federal counterparts. But some states have been particularly aggressive in enforcing antitrust laws—including Connecticut, New York and Texas.

Well, yesterday, the Connecticut Attorney General Richard Blumenthal issued a press release here, announcing he was investigating agreements between the publishers, and Apple and Amazon:

Both Amazon and Apple have reached agreements with the largest e-book publishers that ensure both will receive the best prices for e-books over any competitors -- contract provisions known as “most favored nation” (MFN) clauses.

These agreements appear to deter certain publishers from offering discounts to Amazon and Apple’s competitors -- because they must offer the same to Amazon and Apple. This restriction blocks cheaper and competitive prices for consumers.

AG Blumenthal has sent letters to both Apple and Amazon. Here is the letter to Apple, asking the company to schedule a meeting with his office to discuss their agreements with five of the Big Six publishers (only Random House--the biggest of the Big Six--has not entered into an agency model contract).

In late May, the New York Times reported here that the Justice Department was looking into Apple's involvement in the digital music industry:

... people briefed on the inquiries also said investigators had asked in particular about recent allegations that Apple used its dominant market position to persuade music labels to refuse to give the online retailer Amazon.com exclusive access to music about to be released.

Time will tell whether the Justice Department expands the federal investigation to include e-books.