Macmillan CEO John Sargent returned to the witness stand again on the sixth day of the Apple e-book price fixing trial to be followed by Apple executive Keith Moerer, a key figure in the negotiation of the agency pricing agreements in question. Questioning and witness testimony fell into a familiar pattern: detailed government accusations, witness denials and the presentation of extensive government evidence that appears to undermine those denials.
U.S. attorney Mark Ryan immediately focused on what the government charges is collusive contact by the publishers in the period of late December 2009 to early January 2010 when negotiations over the agency model were taking place. The government offered a variety of evidence showing various Big Six publishers in contact during negotiations with Amazon and Apple. Ryan began questioning Sargent about a series of “congratulatory” e-mails Sargent received from a number of Big Six CEOs and executives in the wake of the Amazon/Macmillan “buy button” dispute and Sargent’s open letter to Macmillan authors and agents. In an e-mail dated late January 2010 with the subject line “Brilliant News,” Hachette CEO David Young said, “well done, sir!,” and another from Penguin chairman John Makinson, which said, “I’m full of admiration for your articulation of Macmillan’s position.”

Ryan’s rhetorical question to Sargent was “these are competitors, right?” and he was quick to hone in on a note from Hachette Livre CEO Arnaud Nourry: “I can ensure (sic) you that you are not going to find your company alone in the battle,” as well as an e-mail from Sargent to a literary agent that refers to the dispute and the necessity of Amazon having to “deal with 5 of us,” and Ryan said, “it doesn’t say five deals,” emphasizing that note also says “a deal done by us,” and noting that “you say you did these deals without any contact with other publishers but that’s not true.” Ryan also noted contact between Sargent and HarperCollins CEO Brian Murray regarding Harper’s negotiations with Apple from late 2009 to early 2010 when the agency agreements were signed, “you wanted the optics to look like you worked alone but you had no doubts the other publishers would follow.” But Sargent responded that “we do business with and we compete with each other,” referring to other Big Six publishers. “They are also business partners.” Ryan noted that Sargent also knew in advance of an announcement that five publishers had signed on with Apple, though Sargent emphasized that he “heard it on TV.”

While Sargent was on the defensive under questioning from Ryan, he was nevertheless forthright, consistently acknowledging (counter-intuitively, it would seem, in a price-fixing trial) that he intended to “increase prices” for select groups of new books. And Ryan consistently tried to show that those price increases were collectively (and inappropriately) embraced by Big Six publishers. Under questioning from Apple attorney Orin Snyder, the focus was changed to Amazon’s market position, and Sargent said, “Amazon had an early advantage in the e-book market and established barriers to entry,” particularly pointing to its “below-cost pricing.” Indeed Sargent went on to outline an e-book marketplace that was totally dominated by Amazon in early 2010 and the disadvantages faced by retailers looking for traction. “Many companies were joining the market,” Sargent said, “but they lacked expertise or were undercapitalized and were proving to be unsuccessful.” Sargent continued, “Even B&N, with great experience in physical books, but had no expertise in digital sales or devices. Google wasn’t a good retailer, Sony was a failure. There were lots of vendors with drawbacks.”
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