Apple Loses Ebook Price Fixing Case, Must Pay $450 Million to Consumers
Posted on July 6, 2015
Apple was just dealt a major blow by the 2nd Circuit Court of Appeals. It lost its appeal of Judge Denise Cote's ruling that it violated antitrust laws by conspiring with major book publishers to fix the price of ebooks. Under the settlement with the Department of Justice, Apple agreed to pay consumers $450 million if it lost the case on appeal.
This was a big loss for Apple. That $450 million dollar payout is looming. Unless, of course, Apple decides to appeal to the U.S. Supreme Court. In a statement Apple said, "Apple did not conspire to fix ebook pricing and this ruling does nothing to change the facts. We are disappointed the Court does not recognize the innovation and choice the iBooks Store brought for consumers. While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps." So, it may still appeal the case one last time.
As for the appellate court, the vote was 2-1 in favor of the Justice Department. The ruling was harsh. The court affirmed that Apple engaged in a horizontal price-fixing conspiracy which is the most "evil" of the price fixing conspiracies. She wrote, "We conclude that the district court correctly decided that Apple orchestrated a conspiracy among the publishers to raise ebook prices, that the the conspiracy unreasonably restrained trade in violation of Section 1 of the Sherman Act, and that the injunction [stopping Apple from signing agreements with the publishers which restrict its ability to change ebook prices] is properly calibrated to protect the public from future anti-competitive harms."
Even the dissenting judge, Judge Dennis Jacobs, agreed that Apple engaged in a horizontal price fixing conspiracy. But he thinks that Apple should have been able to violate the law in order to challenge Amazon.com's market dominance. The majority ripped that argument to shred noting that one may not violate the law in order to achieve competitive goals.
In the meantime, Apple is still stuck with the very expensive court-ordered monitor who roams the halls of Apple looking for antitrust violations.