Wednesday, July 10, 2013

Justice Department declares emphatic victory in price fixing case against Apple eBookstore

In a decision which will undoubtedly be appealed but which opens the possibility of hundreds of millions of dollars in penalties and restitution, Apple was found guilty of conspiring with publishers to raise eBook prices.  Personnally, I thought Apple had a good case but Judge Denise Cote noted that Apple facilitated the conspiracy, took advantage of the publishers paranoia regarding Amazon and also leveraged the impending launch of the iPad that caused higher pricing for eBook consumers.

For the Department of Justice - them of the spider-web of telephone conversations - this was an opportunity for a victory lap and some degree of hyperbole (DoJ)
“This result is a victory for millions of consumers who choose to read books electronically.  After carefully weighing the evidence, the court agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster – to raise e-book prices.  Through today’s court decision and previous settlements with five major publishers, consumers are again benefitting from retail price competition and paying less for their e-books.
“As the department’s litigation team established at trial, Apple executives hoped to ensure that its e-book business would be free from retail price competition, causing consumers throughout the country to pay higher prices for many e-books.  The evidence showed that the prices of the conspiring publishers’ e-books increased by an average of 18 percent as a result of the collusive effort led by Apple.
  “Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so. This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions. 

“I am proud of the outstanding work done by the trial team.  The Antitrust Division will continue to vigorously protect competition and enforce the antitrust laws in this important business, and in other industries that affect the everyday lives of consumers.”
Other reports:

WSJ - No comment from Amazon.

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