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State AG launches antitrust probe of Amazon, Apple e-book deals

By Joab Jackson

August 2, 2010 02:01 PM ET

IDG News Service - The Connecticut Attorney General's Office is investigating Apple and Amazon for striking potentially anticompetitive agreements with electronic book retailers, the office announced Monday.

The state is concerned with contract provisions known as most-favored nation (MFN) clauses, which both e-book vendors have made with a number of large publishing houses. These MFN provisions prohibit publishers from striking discounts with other electronic book vendors, eliminating the possibility of competitors offering less expensive e-books than Amazon or Apple.

"Amazon and Apple combined will likely command the greatest share of the retail e-book market, allowing their most-favored-nation clauses to effectively set the floor prices for the most popular e-books," said Attorney General Richard Blumenthal in a statement.

In a sample of e-book prices, Blumenthal's office found identical prices for e-books on Amazon, Apple, Borders and Barnes & Noble.

The state identified Hachette Book Group, HarperCollins, Macmillan Publishers, Simon & Schuster and the Penguin Group as publishers that have struck these types of deals with either Amazon or Apple.

In letters to the lawyers of both Apple and Amazon, Blumenthal noted that while MFNs are not "per se illegal" under current antitrust laws, they are not entirely legal either. He requested counsel from both companies to meet with him to discuss the inquiry.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

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