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No, this war was started by SCOTUS overturning nearly a century of precedent and law saying that manufacturers can set only their own wholesale prices, not those of the retailers who buy from them.
Brick-and-mortar retailers sell products below cost all the time. They're called "loss leaders". They even do it with books. To them, it's a form of advertising: they hope that the person who comes in to buy the cheap book will buy a couple more books at the same time, and maybe a muffin in the cafe, and so on. In an online store, they have that "people who bought this book also bought...." list, which is where they're hoping to make their profit. Even auto dealers do this -- they really do sell cars "below invoice" ... and then make a profit on everything from financing to rustproofing.
This is bad for several reasons. One is the monopoly angle: while there are, true, many manufacturers for books, there is only one manufacturer for Atlas Shrugged (which is kind of the whole point of copyright). So buyers have no choice. They can't decide between a Ford and a Chevy; if they want to read Atlas Shrugged, they have to buy it from that sole source, Penguin.
Another is that -- especially with the collusion between publishers -- it gives them control over the retail market. They can destroy a retailer's ebook business at will, simply by requiring them to price books at a level where they will not sell -- especially when they permit that retailer's competitors to sell those books at a much lower price.
The biggest problem is that it works against the free market. There is only one Atlas Shrugged and one manufacturer who produces it -- and copyright laws ensure that will remain the situation essentially forever (in terms of our own lifespans, anyway). There is no competition, the force behind that "invisible hand", so the market is not free. Therefore, it is not efficient.
Comparing books to insurance is not a valid comparison. If I don't like the prices one insurance company charges, there are a dozen others competing with them. $X of car insurance is $X of car insurance, whether my card says "Geico" or "Allstate" on it. Insurance is about as fungible as you can get. So the fact that it's sold by agents does not make this artificial "agent" model (and why doesn't it apply to pbooks too?) valid for books. There is a free market in insurance because all the insurance companies are selling the exact same thing -- $X of insurance -- and competing on price and performance. Even if the company, not the agent, sets the price, there is still competition across the market. The same is not true with books, because each book has only one source. There is no competition between providers of that book, because there is only one -- Penguin, in this case. If you need or want Atlas Shrugged, there is no alternative seller.
We could go into all sorts of economic/legal issues here. My take on it is that it's a result of an imbalance: The government has granted privileges to Penguin (and the Agency 5), namely through copyright law, and through the government's willingness to act as their enforcer; it has not, however, attached corresponding responsibilities and limitations to those privileges -- or, rather, that SCOTUS decision detached them. So the market is not free, the invisible hand is manacled, and in the long run, we're the ones getting screwed. You can have either a free market or a regulated market, but half and half -- such as, in this case, regulating the behavior of the citizens (don't copy that floppy) but not the corporations (collusion to cripple online booksellers) is a Bad Thing in the long term, and something that should concern people of all political/economic stripes.
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