John Sargent: ‘Our company is not large enough to risk a worst case judgment’

By Jason Boog Comment

In a frank letter addressed to authors, Macmillan CEO John Sargent explained why his company decided to settle the price fixing lawsuit with the Department of Justice.

After seeing “breathtaking amount” that the major publisher would have to pay in the worst case courtroom scenario, they decided to settle without admitting any wrongdoing. Here is an excerpt:

I had an old fashioned belief that you should not settle if you have done no wrong. As it turns out, that is indeed old fashioned. Our company is not large enough to risk a worst case judgment. In this action the government accused five publishers and Apple of conspiring to raise prices. As each publisher settled, the remaining defendants became responsible not only for their own treble damages, but also possibly for the treble damages of the settling publishers (minus what they settled for). A few weeks ago I got an estimate of the maximum possible damage figure. I cannot share the breathtaking amount with you, but it was much more than the entire equity of our company. I like to believe that we would win at trial. But outcomes are hard to predict with certainty, particularly in a civil case with a low burden of proof. And so we agreed to settle with no admission of guilt. As with the other settling publishers, retailers will now be able to discount Macmillan e-books for a limited time. This change will take effect quickly.