Apple guilty in e-books price-fixing, appeals court says

It’s a long story, but could this be the end? A federal appeals court has agreed with a 2013 lower court ruling that Apple violated antitrust law when it conspired with publishers to fix e-book prices.

The 2-1 decision comes after years of legal wrangling over Apple’s dealings with publishers as the company in 2010 entered a market that had been dominated by Amazon.com. The Internet retailer, maker of the Kindle e-reader, had effectively set $9.99 as a standard price for e-books. But after Apple and five major book publishers talked, publishers got more say in pricing their titles — and e-book prices rose.

The 2013 ruling helped bring about changes in e-book pricing — including some price-slashing — and appointed an Apple antitrust monitor for two years.

Also because of today’s appeals court ruling, Apple will have to pay $450 million as part of a settlement with individuals and 33 states reached last year in a civil lawsuit brought about by the Justice Department’s case.

The 2013 finding against Apple was bolstered in part by emails and quotes from the late Apple co-founder Steve Jobs. In a biography of Jobs, he is said to have urged the publishers to switch to an agency pricing model, in which they set the prices for their titles, with Apple taking a 30 percent cut. Amazon, which had previously set prices, was forced to switch to the same model and raise prices.

The book publishers involved were Hachette, HarperCollins, Penguin Group, Simon & Schuster and Macmillan.

While the book publishers eventually agreed to settlements, Apple chose to fight the Justice Department’s case. (Amazon customers last year began receiving credits as part of a settlement with publishers.)

 

Photo: Apple’s iBooks 2 app is demonstrated for the media on an iPad at an event in the Guggenheim Museum Jan. 19, 2012 in New York City.  (Mario Tama/Getty Images)

 

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  • fstein

    The Wall Street Journal provided the dissenting judge’s view. Grounds for appeals? yup.

    “Judge Dennis Jacobs, writing in dissent, said that the trial judge who found Apple liable for price-fixing in 2013 viewed the case through the wrong legal lens. He said antitrust law couldn’t hold Apple plainly responsible for a conspiracy among publishers on a different rung of the supply chain.

    “On the only horizontal plane that matters to Apple’s e-book business, Apple was in competition and never in collusion,” he wrote. “So it does not do to deem Apple’s conduct anticompetitive just because the publishers’ horizontal conspiracy was found to be illegal.”

    • Mama May

      According to this article, Apple set this enterprise in motion by suggesting the agency pricing model to the publishers. Had Apple (Steve Jobs) not done this, then the anti-trust settlement complaints wouldn’t have emerged.

 
 
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