The 2nd U.S. Circuit Court of Appeals has found that Apple, in a conspiracy with five publishers, tried to rip of customers of e-books by illegally fixing prices.
By a 2-1 decision, the Court upheld a judge’s ruling that in conspiring with the five publishers to increase e-book prices, Apple had broken federal antitrust laws, and that the original ruling by U.S. District Judge Denise Cote in Manhattan, was the correct one.
Two years ago Judge Cotes had handed down an injunction to prevent further price rise fixes .
Unless Apple launches another appeal, it will have to pay $450 million to consumers under a 2014 class action settlement with lawyers and 33 state attorneys generals. The settlement was contingent on the company’s civil liability being upheld.
In a released statement, Apple said “We know we did nothing wrong back — and are assessing next steps”.
Circuit Judge Debra Ann Livingston in writing for the majority called Apple’s actions had “unreasonably restrained trade” .
“The district court did not err in concluding that Apple was more than an innocent bystander,” she wrote.
Assistant Attorney General Bill Baer said the decision “confirms that it is unlawful for a company to knowingly participate in a price-fixing conspiracy, whatever its specific role in the conspiracy or reason for joining it.”
The price fixing agreements between Apple and the publishers saw some e-book prices raised to $12.99 and $14.99 from a $9.99 price charged by Amazon.com.
In his opposing opinion, U.S. Circuit Judge Dennis Jacobs said he believed Apple’s behavior was pro-competitive in taking on Amazon, which held 90 per cent of the market.
“Apple took steps to compete with a monopolist and open the market to more entrants, generating only minor competitive restraints in the process,” he wrote.
The publishers include News Corp’s HarperCollins Publishers LLC, Lagardere SCA’s Hachette Book Group Inc, CBS Corp’s Simon & Schuster Inc, Penguin Group Inc, and Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan.
Boston University School of Law Professor Keith Hylton said Tuesday’s ruling supported an “expansive view” of the law by letting Apple be held responsible under standards which were less-stringent than those it advocated. He said Judge Jacop’s pro-competitive stance “endorses a concept of marketplace vigilantism that is wholly foreign to the antitrust laws”.
“The DOJ could feel emboldened in pursuing those cases with this theory of conspiracy,” he said.
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