“Apple Inc. was the conduit for five major publishers that sought to drive up the price of electronic books as the technology company entered the market in 2010, a Justice Department lawyer told a federal court on Monday,” Joe Palazzolo reports for The Wall Street Journal. “Opening what is expected to be a three-week civil antitrust trial in Manhattan, the Justice Department argued that Apple rallied the publishers around a pricing model that resolved a threat to their already thin margins: Amazon.com Inc.’s $9.99 price for best-selling and newly released e-books. The publishers used the agreements they struck with Apple to renegotiate similar ones with Amazon, threatening to withhold new releases unless Amazon went along, according to the Justice Department.”

Palazzolo reports, “Apple’s lawyer, Orin Snyder, said the company approached the publishers in the same way it had with major recording labels years earlier, with iTunes and the iPod—by negotiating aggressively and shaking up the industry in the process. ‘Let me be clear, Apple is going to trial because Apple did nothing wrong,’ Mr. Snyder said.

“The trial centers on Apple’s adoption of a so-called agency model in which publishers set e-book prices and retailers are paid by commission. Apple’s contracts capped e-book prices at $12.99 or $14.99, depending on the hardcover price,” Palazzolo reports. “In the wholesale configuration used by Amazon, retailers set the price of digital as well as physical books. Amazon held 90% of the market in 2009, a time in the industry Mr. Snyder described as lacking innovation and competition. After Apple’s entry into the market, e-book sales increased, prices overall dipped and e-readers and tablets improved dramatically, said Mr. Snyder. ‘Every single indicator of market health improved after Apple entered the market,’ Mr. Snyder said.”

Read more in the full article here.

MacDailyNews Take: The U.S. DOJ’s attempt to kill real competition for the appearance of competition is just plain stupid.

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