In a sweeping rejection of Apple Inc’s strategy for selling electronic books on the internet, a federal judge ruled that the company conspired with five major publishers to raise the retail prices of e-books.
The decision is a critical step in undoing the harm caused by Apple’s illegal actions
US District Judge Denise Cote in Manhattan found “compelling evidence” that Apple violated federal antitrust law by playing a “central role” in a conspiracy with the publishers to eliminate retail price competition and raise e-book prices.
The decision could expose Apple to substantial damages. It is a victory for the US Department of Justice and the 33 US states and territories that brought the civil antitrust case.
Apple was accused of pursuing the conspiracy to undercut online retailer Amazon.com Inc’s e-book dominance, causing some prices to rise to $12.99 (€10) or $14.99 (€12) from the $9.99 (€8) that Amazon charged. Amazon once held a 90 per cent market share.
“Apple chose to join forces with the publisher defendants to raise e-book prices and equipped them with the means to do so,” Cote said in a 159-page decision. “Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did.”
Yesterday’s decision was not a total surprise, given that Cote indicated before the two-and-a-half week non-jury trial began on June 3 that Apple’s defences might fail. Cote ordered a trial to set damages.
“This result is a victory for millions of consumers who choose to read books electronically,” Bill Baer, head of the Justice Department’s antitrust division, said in a statement. “This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions.”
In a statement, Apple maintained that the plaintiffs’ allegations are false and said it will appeal Cote’s 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.