2nd Circuit Upholds Apple's Antitrust Violations in E-Book Pricing Case
Apple was guilty of violating antitrust laws by conspiring with five major book publishers to eliminate price competition and raise e-book prices (see report in the July 11, 2013, issue), the 2nd U.S. Circuit Court of Appeals ruled Tuesday. It upheld U.S. District Court in New York’s 2013 decision. Apple later reached a $450 million settlement with consumers and state attorneys general, with most of the money going to e-book customers (see report in the June 18, 2014, issue). Apple’s settlement was contingent upon the outcome of its appeal at the 2nd Circuit.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
“The district court’s decision that Apple orchestrated a horizontal conspiracy among the Publisher Defendants to raise ebook prices is amply supported and well-reasoned, and ... the agreement unreasonably restrained trade,” said Circuit Judge Debra Ann Livingston in the court’s 2-1 opinion. “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 ebook retailer at the expense of passing control over all ebook prices 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 ebooks 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.”
Judge Dennis Jacobs, who dissented, said Apple couldn’t be culpable for the publishers’ conspiracy. On the “horizontal plane that matters to Apple’s e-book business, Apple was in competition and never in collusion,” Jacobs said in his dissent. “So it does not do to deem Apple’s conduct anticompetitive just because the publishers’ horizontal conspiracy was found to be illegal.”
Assistant U.S. Attorney General Bill Baer lauded the 2nd Circuit’s ruling Tuesday, saying in a statement that 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. Because Apple and the defendant publishers sought to eliminate price competition in the sale of e-books, consumers were forced to pay higher prices for many e-book titles.” Apple pushed back against the 2nd Circuit’s ruling, saying in a statement that the company is considering its next steps in the case: “Apple did not conspire to fix e-book pricing and this ruling does nothing to change the facts.”