Connecticut AG probes Apple, Amazon over e-books

SAN FRANCISCO Mon Aug 2, 2010 12:48pm EDT

SAN FRANCISCO (Reuters) - Connecticut Attorney General Richard Blumenthal is investigating deals struck by Inc and Apple Inc to offer low prices on electronic books, saying the agreements may block rivals from providing attractive pricing.

Earlier this year, Amazon and Apple worked out a "most favored nations" deal with major publishers, ensuring rival booksellers would not be able to work out an even lower price, Blumenthal said.

He cited leading publishers such as Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin. Blumenthal sent letters to Amazon and Apple asking to meet with their officials to address the concerns.

"The e-book market is set to explode -- with analysts predicting that e-book readers will be among the holiday season's biggest electronics gifts -- warranting prompt review of the potential anti-consumer impacts," Blumenthal said in a statement. "This restriction blocks cheaper and competitive prices for consumers."

Amazon and Apple are competing fiercely in the e-book market, alongside national retail chains such as Barnes & Noble Inc and Borders Group Inc.

Neither Amazon nor Apple were immediately available for comment. Representatives for Penguin could not be immediately reached. Simon & Schuster and HarperCollins declined to comment.

Digital content is key to the overall strategy for e-readers such as Amazon's Kindle or Apple's iPad -- tablet-like devices that allow for digital reading whose popularity has surged.

E-book prices are far lower than hardcover prices and Amazon and Apple both offer many best sellers for $9.99, causing consternation in the publishing industry that the market for hardcover books will erode.

(Reporting by Alexandria Sage; editing by Andre Grenon)

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