Federal court rules against Apple in case alleging e-book price - WTRF 7 News Sports Weather - Wheeling Steubenville

Federal court rules against Apple in case alleging e-book price fixing

Posted: Updated:

A federal court in New York recently ruled against Apple Inc. in a case filed by 33 states including West Virginia, alleging Apple conspired with major publishers to raise the retail price of electronic books, the West Virginia attorney general's office recently announced.

In its July 10 order, U.S. District Judge Denise Cote for the Southern District of New York said Apple played a "central role in facilitating and executing" a conspiracy with five publishers: Hachette Book Group Inc, HarperCollins Publishers LLC, Holtzbrinck Publishers LLC (Macmillan), Penguin Group USA Inc. and Simon & Schuster Inc.

The court determined Apple worked with these publishers to raise e-book prices in the spring of 2010 above the $9.99 prevailing price charged by Amazon, in some cases, as much as 50 percent or more for a single title.

The 33 states and territories joined the U.S. Department of Justice filing the antitrust suits in April 2012, alleging Apple and the five companies conspired to raise, fix and stabilize the retail price for newly released and bestselling e-books, court documents state.

"Without Apple's orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010," the order states.

According to court documents, publishers settled with the Department of Justice and only Apple went to trial. The settlement resulted in consumers receiving more than $165 million in compensation. West Virginia Attorney General Patrick Morrisey said it is unknown how much West Virginians will receive.

The court determined Apple knew about the publishers' intention to raise e-book prices before meeting with the first publisher.

According to the opinion, Apple first met with publishers in December 2009, where Apple agreed to work with them to raise prices.

The court said Apple wanted to launch its new iBookstore to coincide with the launch of its new iPad. However, court documents further state Apple would only do this it had agreements with publishers, could assure a profit in its iBookstore and could offer e-book titles at the same time as the hardcovers. 

"Apple seized the moment and brilliantly played its hand," the court said in its opinion. "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 … 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 that they needed to raise e-book prices."

According to the court ruling, the agreement also benefited Apple by guaranteeing it could match the lowest retail price. The agreement also imposed a penalty on publishers if they didn't force Amazon and other retailers to change their business models, court documents state.  

A trial to determine damages will follow, court documents state.