Judge Goes Easy on Apple, Limits Government Oversight

 
 
By Michelle Maisto  |  Posted 2013-09-07
 
 
 

A federal judge showed Apple some leniency in a Sept. 6 ruling after the company was found guilty of conspiring with five U.S. publishers to drive up ebook prices.

Judge Denise L. Cote of the Federal District Court in Manhattan granted the U.S. government oversight of all content-distribution deals negotiated by Apple, the Wall Street Journal reported Sept. 6.

The Justice Department had instead hoped to have "a say in Apple's sales and distribution of television shows, movies and music," said the report. 

Cote also prohibited Apple from entering into any agreement with publishers that "limits its ability to set or alter the retail price for any e-books for up to two years," prohibited Apple from entering "most favored nation" agreements with publishers during those two years and for the same time period appointed an external monitor to keep an eye on Apple's antitrust compliance practices, the report added.

Assistant Attorney General Bill Baer said in a statement that he was pleased with the ruling.

"Consumers will continue to benefit from lower e-books pricing as a result of the department's enforcement action to restore competition in this important industry," Baer said, according The New York Times. "By appointing an external monitor to ensure future compliance with the antitrust laws, the court has helped protect consumers from further misconduct by Apple."

Apple said it plans to appeal Cote's July ruling.

"Apple did not conspire to fix e-book pricing. The iBookstore gave customers more choice and injected much-needed innovation and competition in the market," Apple spokesperson Tom Neumayr told the Times Sept. 6.

In July, Cote handed down a 160-page ruling, in which she rejected Apple attorneys' claims that the iPad maker shouldn't be held responsible for price fixing that its publishing partners may have done.

In April 2012, the Justice Department filed suits against Macmillan, HarperCollins, Simon & Schuster, Hachette Book Group and Penguin Group USA. All five publishers, while insisting on their innocence, settled out of court.

Penguin, however, held out at first. In an April 4 blog post, CEO John Makinson said he felt unable to settle because, one, Penguin had done nothing wrong and, two, it believed that "the agency model is the one that offers consumers the prospect of an open and competitive market for ebooks. ... We reasoned that the prevention of a monopoly in the supply of ebooks had to be in the best interests, not just of Penguin, but of consumers, authors and booksellers as well."

Apple, ultimately, remained alone it its decision to prove its innocence in court.

At the AllThingsD conference June 3, Apple CEO Tim Cook said during an interview, "We're not going to sign something that says we did something we didn't do. ... So, we're going to fight."

In her ruling, Cote said that Apple seized a 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," Cote continued, "... Apple garnered the signatures it needed to introduce the iBookstore at the Launch. ... Apple not only willingly joined the conspiracy, but also forcefully facilitated it."

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