Apple Loses Appeal of 2013 Ebook Price-Fixing Antitrust Case

Apple will now have to pay about $450 million to consumers after fighting the ebook price-fixing charges in court for more than three years.

Apple, ebooks, antitrust, Justice Department, price-fixing, iBooks

Apple must pay consumers a total of $450 million in damages after the company lost an appeal of a 2013 court decision, which found that Apple illegally conspired with ebook publishers to raise prices starting in 2010.

In the latest legal round in the price-fixing case, a three-judge panel in the Second U.S. Circuit Court of Appeals in Manhattan issued a 2-1 ruling that upholds an earlier lower court ruling, which found that Apple violated U.S. civil antitrust rules in taking its alleged actions on ebook prices, according to a June 30 article in The Wall Street Journal. Apple fought the case, which was brought by the U.S. Department of Justice, for more than three years, even after the ebook publishers involved in the case had settled with the government, the article reported.

Apple could still appeal the case to the U.S. Supreme Court or ask the Second Circuit to review the latest decision.

Back in November, Apple reached an agreement with private plaintiffs and 33 states to pay some $450 million in damages for the allegations, but the settlement was contingent on the appeal ruling which was just issued, The Journal reported.

In her legal opinion in the case, Second Circuit Judge Debra Ann Livingston wrote, "We conclude that the district court correctly decided that Apple orchestrated a conspiracy among the publishers to raise e-book prices," which "unreasonably restrained trade" in violation of federal antitrust laws, The Journal reported.

The earlier district court ruling in 2013 found that Apple was guilty of colluding with the nation's largest book publishers to raise prices and wrest control of the ebook market from, which at the time held a large majority of that market, according to an earlier eWEEK story.

Since the charges were first filed by the government, Apple has maintained that it did nothing wrong.

"Apple did not conspire to fix ebook pricing, and this ruling does nothing to change the facts," the company said in a statement received by The Journal. "We are disappointed the Court does not recognize the innovation and choice the iBooks Store brought for consumers. While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps."

Judge Dennis Jacobs, the appeals court judge who dissented from the majority opinion, wrote that the trial judge in the 2013 case was wrong, The Journal reported. "On the only horizontal plane that matters to Apple's e-book business, Apple was in competition and never in collusion," Jacobs wrote in his opinion. "So it does not do to deem Apple's conduct anticompetitive just because the publishers' horizontal conspiracy was found to be illegal."

Hachette Book Group, Simon & Schuster and HarperCollins Publishers settled their involvement in the case on the day the government filed its 2012 complaint, according to The Journal. Penguin and Macmillan settled later. The total of the settlements by the publishers was about $170 million.

The Justice Department first warned Apple and the publishers of its investigation and pending charges in March 2012, according to an earlier eWEEK report. After the publishers settled, the trial got under way in June 2013, based largely around Apple's internal emails. In July 2013, U.S. District Court Judge Denise Cote ruled that Apple had conspired with the publishers to drive the prices of ebooks beyond the $9.99 set by Amazon, the major ebook seller at the time.

"Apple and the Publisher Defendants shared one overarching interest—that there be no price competition at the retail level," Cote wrote in her 160-page ruling. "Apple did not want to compete with Amazon … on price; and the Publisher Defendants wanted to end Amazon's $9.99 pricing and increase significantly the prevailing price point for ebooks. With a full appreciation of each other's interests, Apple and the Publisher Defendants agreed to work together to eliminate retail price competition."