Apple settles e-book antitrust case with U.S. states; contingent on outcome of appeal

“Apple Inc reached an out-of-court settlement with U.S. states and other complainants in an e-book price-fixing class action lawsuit on Monday, effectively avoiding a trial in which the iPad maker faced more than $800 million in claims,” Supriya Kurane reports for Reuters. “U.S. District Judge in Manhattan Denise Cote ordered the parties to submit a filing to seek approval of their settlement within 30 days. The terms of the settlement, which still needs court approval, have not been revealed.”

“The U.S. Department of Justice sued Apple and five publishers in April 2012, accusing them of working together illegally to increase e-book prices,” Kurane reports. “Since then, 33 states and U.S. territories have separately sued Apple on behalf of their consumers, while individual consumers in other states and territories filed a class action lawsuit.”

“Last July, a federal court found Apple liable for colluding with the publishers after a separate non-jury trial in a case brought by the U.S. Department of Justice. Judge Cote found that Apple took part in a price-fixing conspiracy to fight online retailer Amazon.com Inc’s dominance in the e-book market,” Kurane reports. “Apple is appealing that decision and Monday’s settlement is contingent on the outcome of that appeal. ‘As set forth in the memorandum of understanding, any payment to be made by Apple under the settlement agreement will be contingent on the outcome of that appeal,’ Steve Berman of Hagens Berman Sobol Shapiro, the plaintiffs’ lead lawyer, wrote in a letter to the judge.”

Read more in the full article here.

MacDailyNews Take: The fiasco continues…

To paraphrase Scott Turow, the president of the Author’s Guild:

The irony of this bites hard: our government has killed real competition in order to save the appearance of competition.

Related articles:
Apple’s Star Chamber: An abusive judge and her prosecutor friend besiege the tech maker – December 5, 2013
In pretrial view, judge says leaning toward U.S. DOJ over Apple in e-books case – May 24, 2013
Lawyers have complained for years that Judge Denise Cote pre-judges cases before she enters the courtroom – August 14, 2013

Stephen Colbert goes after Amazon, offers ‘I didn’t buy it on Amazon’ stickers – June 5, 2014
Amazon’s Bezos has gone too far: The e-book monopolist may finally face a court of law – May 25, 2014
U.S. Federal Puppet Denise Cote: ‘Apple’s reaction to the existence of a monitorship underscores the wisdom of its imposition’ – January 16, 2014
Judge Denise Cote denies Apple request block her friend as ‘antitrust compliance monitor’ – January 13, 2014
Antitrust monitor Bromwich rebuts Apple accusations of ‘unconstitutional’ investigation – December 31, 2013
Apple seeks to freeze its U.S. e-books ‘antitrust monitor’ – December 15, 2013
The persecution of Apple: Is the U.S. government’s ebook investigation out of control? – December 10, 2013
Apple’s Star Chamber: An abusive judge and her prosecutor friend besiege the tech maker – December 5, 2013
Apple takes aim not just at court-ordered e-books monitor, but also at U.S. District Judge Denise Cote herself – December 2, 2013
U.S.A. v. Apple: Judge Denise Cote assigns DOJ monitor in Apple ebook price-fixing case – October 17, 2013
U.S.A. v. Apple: Judge issues injunction against Apple in ebooks antitrust case; largely in line with what DOJ wanted – September 6, 2013
U.S.A. v. Apple: Judge Denise Cote says Apple needs third-party supervision after ‘blatant’ ebook price fixing – August 28, 2013

8 Comments

  1. Apple’s core business is neither book publishing, nor book sales. This trial was becoming a colossal public distraction.

    This deal allows Apple to resume focus on making insanely great devices, without totally conceding the case if they prevail on appeal, this deal becomes void.

    1. Yes, but Apple needs to clear it’s name and reverse this unjust verdict and unfounded fabricated charge, which has major IP and business ramifications that are just as important as everything else Apple does and empirical too.

  2. Apple should beat Amazon at their own game. Start selling books at cost and drive the revenue away from Amazon. The amount of money involved will be peanuts to Apple but it will hurt Amazon’s bottom line and make it harder for them to break even.

    1. Considering ebooks and book sales are now in the mid to high single digits of Amazon’s revenue, it would be very beneficial for the consumer. 😀

  3. Antitrust law and precedent are woefully out of date and irrelevant, and must be revised in the context of this trial. My understanding is: existing law basically specifies that any meeting of competitors (eg, Apple and publishers) in which pricing or a coordinated competitive response to another player (here, Amazon) is _prima facie_ (“on its face”) evidence of collusion and anti-trust behavior. Apple and the publishers do not deny these facts, which is all the DOJ needs to find them guilty. In this situation, context is everything. But existing law does not require a contextual evaluation.

    One cannot overlook the fact that the publishers were simply trying to correct a mistake they realized they had made (by agreeing to sell e-books to Amazon on the same wholesaler basis as for physical books, when the agency-basis of sale would be far more appropriate for e-books), and that Apple basically said they needed to receive the same best price the publishers offered to any other similarly large distributor (which entirely legal). Neither Apple nor the publishers were seeking to illegally harm Amazon. They were simply trying to undo the damage that Amazon was inflicting on the e-book market, to the long-term detriment of all, including consumers (but excluding Amazon), notwithstanding temporarily low predatory prices. The publishers just wanted to move forward; they just wanted to proceed with what they should have done earlier: sell e-books on the agency basis. Apple just wanted to distribute the publishers’ e-books at whatever retail prices the publishers deemed was appropriate.

    Hopefully the Court of Appeals will examine this case in the context of Game Theory (which did not exist when the original anti-trust laws were formulated and the landmark Standard Oil case precedent was established) and will reverse the lower court decision. It is high time these laws be brought up to date with everything we have learned about pricing, competition, strategic advantage, and decision theory since the Standard Oil case.

    1. That will probably require reexamination of the Anti-trust law before the decision can be turned to Apple and the Publisher’s favor. The fact is because the contracts were made, the publishers represented a huge majority of the book/ebook publishing business and the Agency model was effectively in force for a period of time, though short, according to the law on the books a ‘crime’ was premeditated and committed and judgement made legally. I’m sure this case could have been avoided by going about it a different way or simply stopping to think more before implementing. It’s amazing Apple’s lawyers didn’t see this coming.. Maybe they weren’t given enough time by the higher ups to look through it considering it was sort of under a time limit to get it out simultaneously with the iBookstore. A period I understand was about 2 months or so.

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