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Update: Hachette, Simon & Schuster, HarperCollins to modify agency agreements in U.S.

Publishers Lunch reports that the three publishers opting to settle the antitrust lawsuit launched today by the U.S. Department of Justice have agreed to drop the agency model for a period of two years. However, the report is quick to point out that the agency model is not dead, as other firms named in the lawsuit are choosing to fight the charges in court.

Michael Cader of Publishers Lunch offers analysis (subscription required):

While those three publishers will relinquish their agency models, agency itself will persist, since Macmillan has pledged to continue that pricing model, and one can infer that Penguin will continue with it as well. Which should allow those who adopted it later, such as Sourcebooks, to also continue to employ agency if they wish.

HarperCollins’ New York office has already released a statement on the matter, noting that the firm “did not violate any anti-trust laws” and that its “business terms and policies have been, and continue to be, designed to give readers the greatest choice of formats, features, value, platforms and partners – for both print and digital.”

The press release also describes the decision to settle as a “business decision” intended to “end a potentially protracted legal battle.”

[Updated at 1:08 p.m.] Publishers Lunch has updated its analysis of the settlement, pointing out that it “does not seem to require [Hachette, Simon & Schuster, and HarperCollins] to abandon the agency selling relationship itself.” The expanded report also notes that the Department of Justice “appears to have set up a system that will allow limited discounting of ebooks, so as to inhibit predatory loss-leader pricing of ebooks from the settling publishers.”

From Publishers Lunch:

They [i.e., the settling publishers] actually can “enter into Agency Agreements with E-book Retailers under which the aggregate dollar value of the price discounts or any other form of promotions to encourage consumers to purchase one or more of the Settling Defendant’s E-books (as opposed to advertising or promotions engaged in by the E-book Retailer not specifically tied or directed to the Settling Defendant’s E-books) is restricted.” But that restriction “shall not interfere with the e-book retailer’s ability to reduce the final price paid by consumers…by an aggregate amount equal to the total commissions the settling defendant pays to the e-book Retailer, over a period of at least one year, in connection with the sale of the Settling Defendant’s E-books to consumers.”

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