1. They must terminate their Agency Agreements with Apple within seven days after entry of the proposed Final Judgment.
2. They must terminate those contracts with e-book retailers that contain either a) a restriction on the e-book retailer’s ability to set the retail price of any e-book, or b) a “Price MFN,” as defined in the proposed Final Judgment, as soon as each contract permits starting thirty days after entry of the proposed Final Judgment.
3. For at least two years, they may not agree to any new contract with an e-book retailer that restricts the retailer’s discretion over e-book pricing.
4. For at least five years, they may not enter into an agreement with an e-book retailer that includes a Price MFN.

The Complaint and CIS provide a sufficient factual foundation as to the existence of a conspiracy to raise, fix, and stabilize the retail price for newly-released and bestselling trade e-books, to end retail price competition among trade e-books retailers, and to limit retail price competition among the Publisher Defendants. Although the Government did not submit any economic studies to support its allegations, such studies are unnecessary. The Complaint alleges a straightforward, horizontal price-fixing conspiracy, which is per se unlawful under the Sherman Act.... The Complaint also details the defendants’ public statements, conversations, and meetings as evidence of the existence of the conspiracy. The decree is directed narrowly towards undoing the price-fixing conspiracy, ensuring that price-fixing does not immediately reemerge, and ensuring compliance. Based on the factual allegations in the Complaint and CIS, it is reasonable to conclude that these remedies will result in a return to the pre-conspiracy status quo. In this straightforward price-fixing case, no further showing is required.

It is not necessary to hold an evidentiary hearing before approving the decree. Given the voluminous submissions from the public and the non-settling parties, which describe and debate the nature of the alleged collusion and the wisdom and likely impact of settlement terms in great detail, as well as the detailed factual allegations in the Complaint, the Court is well-equipped to rule on these matters. A hearing would serve only to delay the proceedings unnecessarily.

If unfettered e-books retail competition will add substantially to the competitive pressures on physical bookstores, or if smaller e-book retailers are unable to compete with Amazon on price, these are not reasons to decline to enter the proposed Final Judgment.

None of the comments demonstrate that either condition for predatory pricing by Amazon existed or will likely exist. Indeed, while the comments complain that Amazon’s $9.99 price for newly-released and bestselling e-books was “predatory,” none of them attempts to show that Amazon’s e-book prices as a whole were below its marginal costs.

Third, even if Amazon was engaged in predatory pricing, this is no excuse for unlawful price-fixing. Congress “has not permitted the age-old cry of ruinous competition and competitive evils to be a defense to price-fixing conspiracies.” ... The familiar mantra regarding “two wrongs” would seem to offer guidance in these circumstances.

While publishers are entitled to their profits, consumers are equally entitled to a fair and open marketplace. This settlement will provide restitution to those customers who were harmed by this price-fixing scheme, but it also will restore competition in the eBook market for consumers’ long-term benefit.

I’ve just seen a letter sent to an author who has published books under Hachette’s imprints in some territories and with Tor Books and its sister companies in other territories (Tor is part of Macmillan). The letter, signed by Little, Brown U.K. CEO Ursula Mackenzie, explains to the author that Hachette has “acquired exclusive publication rights in our territories from you in good faith,” but warns that in other territories, Tor’s no-DRM policy “will make it difficult for the rights granted to us to be properly protected.” Hachette’s proposed solution: that the author insist Tor use DRM on these titles. “We look forward to hearing what action you propose taking.”

The letter also contains language that will apparently be included in future Hachette imprint contracts, language that would require authors to “ensure that any of his or her licensees of rights in territories not licensed under this agreement” will use DRM. 

Many contracts from all quarters already contain some form of wording to ensure that the licensee publisher does apply DRM and also sees to it that their sub-licensees and e-tailers apply it too.

Our new wording is clearer and we will, as always, negotiate variations of that wording with the many parties with which we trade, nearly all of whom agree with the basic principles of our DRM policy.

We are fully aware that DRM does not inhibit determined pirates or even those who are sufficiently sophisticated to download DRM removal software. The central point is that we are in favour of DRM because it inhibits file-sharing between the mainstream readers who are so valuable to us and our authors.

Readers aren’t stupid. When they discover that paying for books results in locked, crippled editions, and downloading for free (simply by typing the title and “free e-book” into Google or Pirate Bay) gets them the same book, minus the offensive restrictions, they start to put two and two together. After all, DRM is not a selling point. There’s no one who’s ever bought a book because it had DRM. No one has ever clicked onto Amazon saying, “I wonder if there’s any way I can buy a book that offers less than the books I’ve been buying all my life.” People buy DRM e-books because they have no choice, or because they don’t care about it, or because they don’t know it’s there. But DRM never leads to a sale.

I know of at least one large agency that has told Hachette that it will not market books to them so long as this policy is in force. And Hachette’s authors should pay attention because, in the end, it is they who will suffer from the effects of DRM. Readers probably won’t remember who published the book that nuked itself due to a DRM misfire or was lost due to a platform switch. But they’ll remember the writer whose book they paid for and to which they lost access.

Details are still scarce, but sources say Apple and Macmillan refused to participate in settlement talks while some of the other publishers are still hoping to avoid a drawn out legal battle, and may settle soon. Update: Bloomberg is now reporting that S&S, HarperCollins and Hachette have settled. It will be interesting to see what kind of defense Apple brings, because the evidence of collusion doesn't look good for them at all. Despite Authors Guild president Scott Turow's self-serving claim that this will somehow hurt culture, this is good news for readers: busting Apple's and the publishers' iron grip on ebook prices will likely reduce them across the board.

Here is this the government's complete filing (pdf and embedded below).

"On the one hand, you have millions of books for free where there is no longer an author to pay and, on the other hand, there are very recent books, bestsellers at $9.99, which means that all the rest will have to be sold at between zero and $9.99."