On April 11, the U.S. Department of Justice filed an antitrust suit against Apple and several book publishers, claiming that the companies conspired to limit price competition in e-books, in violation of Section 1 of the Sherman Antitrust Act. The Justice Department claims that the agreements between Apple and the book publishers to enter into an "agency" distribution model with a "most favored nation" clause had the direct impact of raising the price of e-books to consumers.
[This article republished with permission from the author and the Tuck School of Business.]