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Apple loses appeal in e-book price-fixing case Print Email
Written by Jeremy Burns   
Monday, 06 July 2015 04:57 PM America/New_York

Apple-logoApple has lost its appeal against a 2014 court ruling that the technology giant had engaged in an e-book price-fixing conspiracy with five major publishers. On June 30, the 2nd Circuit Court of Appeals upheld the 2013 decision issued by Judge Denise Cote that the companies did, in fact, conspire to artificially inflate the price of e-books to the detriment of consumers.

"We conclude that the district court correctly decided that Apple orchestrated a conspiracy among the publishers to raise e-book prices, that the conspiracy unreasonably restrained trade in violation of the Sherman Act, and that the injunction is properly calibrated to protect the public from future anticompetitive harms," wrote Debra Ann Livingston for the court. "In addition, we reject the argument that the portion of the injunctive order preventing Apple from agreeing to restrict its pricing authors modifies Macmillan and Simon & Schuster's consent decrees or should be judicially stopped. Accordingly the judgment of the district court is affirmed."

The decision was upheld by a 2-1 split in the appeals court. The dissenting justice felt that the original case's plaintiffs had failed to establish the alleged motive, and pointed to Amazon's massive market share of the e-book market as evidence of the bigger, possibly illegal issue behind the case.

"Amazon’s 90 percent market share constituted a monopoly under antitrust law," Judge Dennis Jacobs wrote in his dissent, adding that "collusion among competitors does not describe Apple’s conduct or account for its motive."

"Apple took steps to compete with a monopolist and open the market to more entrants, generating only minor competitive restraints in the process," Jacobs continued. "Its conduct was eminently reasonable; no one has suggested a viable alternative."

His fellow justices disagreed, however, cautioning against "marketplace vigilantism."

"Plainly, competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new e-book retailer at the expense of passing control over all e-books to a cartel of book publishers—publishers who, with Apple’s help, collectively agreed on a new pricing model precisely to raise the price of e-books and thus protect their profit margins and their very existence in the marketplace in the face of the admittedly strong headwinds created by the new technology," read the judgment.

Apple is unhappy with the results of the case.

"We are disappointed the court does not recognize the innovation and choice the iBooks Store brought for consumers,” a statement issued by the company read. “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."