Apple Leads Price Conspiracy

Judge Rules Apple Led Price Conspiracy, “Seizing the Moment” As Publishers Looked to Defy Amazon


U.S. District Judge Denise Cote has ruled against Apple in the Justice Department’s ebook price-fixing case, saying the tech company coordinated a scheme involving five major publishers that were looking for a way to challenge Amazon’s ebook pricing strategy. In a decision issued July 10, Cote said:

“The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy. Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010.”

Apple released a statement saying it plans to appeal the decision.

“Apple did not conspire to fix e-book pricing,” Apple spokesman Tom Neumayr said. “When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong.”

Cote also called for a trial on damages, noting that the conspiracy caused ebook prices to rise, resulting in some consumers paying more, buying a title other than the one they wanted or forgoing a purchase altogether.

The publishers named as defendants settled with the Justice Department long before the case went to court.During trial testimony publishing executives denied that they colluded and Apple officials said they didn’t know whether publishers were communicating amongst themselves on pricing. In her decision, Cote rejects those claims.

“Apple and the Publisher Defendants shared one overarching interest — that there be no price competition at the retail level.”

Cote goes on to say that:

“Apple seized the moment and brilliantly played its hand. Taking advantage of the Publisher Defendants’ fear of and frustration over Amazon’s pricing, as well as the tight window of opportunity created by the impending launch of the iPad on January 27 (the “Lauch”), Apple garnered the signatures it needed to introduce the iBookstore at the Launch. It provided the Publisher Defendants with the vision, the format, the timetable, and the coordination they needed to raise e-book prices.”

Information for this story was supplied by The Authors Guild, 31 E. 32nd Street, 7th floor. NY NY 10016.

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