Barnes & Noble claims e-book settlement would hurt the public

The Justice Department filed suit in April against Apple and two publishers, Macmillan and Penguin Group, for the alleged price-fixing of e-books. Three other publishers, Hachette, HarperCollins and Simon & Schuster, agreed to the government's terms to avoid litigation.

Prosecutors said Apple and the five publishers were unhappy that Amazon was driving down the price of e-books. According to the government's complaint, the companies conspired to set up a new business model, called the agency model, which raised the price of e-books by about $2 to $3 per book.

Under agency pricing, the publishers, not bookstores, set the retail price of e-books. 

But Barnes & Noble argued that the agency model was necessary to break Amazon's monopoly over e-books.

The company noted that Amazon controlled 90 percent of the e-book market before agency pricing, and that it is now responsible for about 60 percent of sales.

"The ultimate beneficiary has been the consumer, who has enjoyed more choice and more competition on products and service," Barnes & Noble wrote.

The government's proposed settlement with the three publishers would void their agreements and bar them from entering similar agency pricing agreements for two years.

Barnes & Noble argued that the proposal would require regulatory oversight by the Justice Department and would harm consumers and third parties, such as Barnes & Noble.

"The end loser of this unnecessary and burdensome regulatory approach will be the American public, who will experience higher overall average e-book and hardback prices and less choice, both in how to obtain books and in what books are available," the bookstore wrote.

Barnes & Noble filed the letter as part of a public comment period on the proposed settlement. The deadline for comments is June 25. The Justice Department is expected to reply after all of the comments have been filed.

Gina Talamona, a Justice Department spokeswoman, declined to comment directly on the Barnes & Noble filing, but said the planned settlement "will restore competition to the industry and benefit consumers."

She argued that allowing retailers to lower the prices of e-books "will allow for a more fair and open marketplace."