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DOJ Says Publishers Are Again Colluding in Objecting to Proposed Apple Penalty in E-Book Case

iBooks.pngWith Apple and the U.S. Department of Justice headed back to court today for a hearing on the government's proposed penalties for Apple, GigaOM highlights several developments in the case. Of particular interest is a letter from DOJ attorney Lawrence Buterman arguing that an objection to the proposed penalties by the publishers that were part of the case is direct evidence of why the penalties are needed to protect consumers.
“A necessary component of this Court’s decision finding Apple liable for horizontal price-fixing is that the publishers themselves were engaged in a horizontal price-fixing conspiracy…[There] is reason to believe the Publisher Defendants may be positioning themselves to pick things back up where they left off as soon as their two-year clocks run. Indeed, the very fact that the Publisher Defendants have banded together once again, this time to jointly oppose two provisions in the Proposed Final Judgment that they believe could result in lower ebook prices for consumers, only highlights why it is necessary to ensure that Apple (and hopefully other retailers) can discount ebooks and compete on retail price for as long as possible.”
Apple has called the proposed penalties, which would force the company to allow competitors to bring back direct links to their e-book stores in their App Store apps and nullify existing "agency model" contracts with publishers, "draconian" and "punitive". Apple could also end up being liable for as much as $500 million in damages.

At today's hearing, Apple will also argue for a stay on further court proceedings until its appeal can be heard, proposing that a jury trial be held in October 2014. The DOJ is arguing against a stay and suggesting that an appeal trial should be held beginning in April 2014.

Update: Associated Press reports that Judge Denise Cote has denied Apple's request for a stay of the case pending appeal.
A judge on Friday refused a request by Apple to temporarily suspend her ruling that it violated antitrust laws by conspiring with publishers to raise electronic book prices in 2010.

Judge Denise Cote, ruling from the bench in Manhattan federal court, declined to withdraw the effect of last month's ruling while Cupertino, Calif.-based Apple Inc. appeals.

The maker of iPods, iPads and iPhones continues to fight what it calls "false accusations."

Top Rated Comments

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16 months ago
So the publishers collude, with or without Apple and yet Apple is the one who has to be punished. What a joke.
Rating: 30 Votes
16 months ago
Don't you just LOVE the progressive perversion of the commerce clause being used as a tool to tell business what they can and cannot do?

You make it impossible for a corporation to conduct business in the United States and then bitch and moan when they offshore jobs and keep profits overseas.

Why would a corporation reward a population and the government it elects when that population/government does everything within its legal (and made up) power to prevent that corporation from doing business?

Fight the good fight Apple. Keep that ~$100 billion overseas and invest in companies in other countries!!!
Rating: 18 Votes
16 months ago
Wow, the DOJ is looking more and more pathetic.

I'm glad that the DOJ is showing its true colors in this new accusation: paranoid and incompetent.
Rating: 14 Votes
16 months ago
I think I understand....

1. Amazon has a near monopoly (monopsony?)

2. Amazon can do whatever they want (it was Amazon who requested the DoJ pursue this matter in the first place)

3. Many companies are affected (if not outright killed off) by Amazon's predatory practices

4. If those companies make a peep, they are "colluding" against poor Amazon!

5. How could all the publishers respond at the same time? It's almost as though they're all responding to the same thing that just happened. Nah... collusion.
Rating: 14 Votes
16 months ago
Ugh, what a mess. On one hand, Apple and the publishers did collude to bring up prices, which is bad for consumers. On the other, Amazon's loss leader strategy with ebooks would practically create a monopoly, which is bad for consumers and the publishers. Now that this thing could be pushed all the way to 2014 is even more aggravating.

Regardless, the DoJ has no right telling Apple what they should do with their App Store.
Rating: 13 Votes
16 months ago
DC is a shakedown operation, so if you're not plugged in you get mugged.

This is why Bozo buying the Washington Post is such a good deal. Everyone in DC-NY corridor wonders how the digitized Wal-Mart clown will make money on a dying antique newspaper, but they don't get it - he bought influence, he bought his way into the social circle of the DOJ, Congresscritters, etc. No matter the clowns in power, Bozo has access to them with not the business of the Post but the social institution - the lunches and cocktail parties and all the rest. That's where power is in DC.

Apple is a good example of what happens when you don't grease the DC skids. They make all this money, are an American icon more effective than any propaganda, employ thousands, and make popular stuff. But they don't play the game...so you see Tim Cook be whipping boy in Congress, this DOJ shakedown, etc. Meanwhile Amazon runs vast sweatshop warehouses with a predatory money-losing business model - and gets away with it.

But they play the game better than Apple does, indeed with the WaPo purchase obviously play it better than any other digital business.
Rating: 13 Votes
16 months ago

I would have to say you are wrong on both counts of it being bad. If Amazon is willing to buy an ebook for $10 and sell it for $7, then that is great for the consumers because they get it for cheaper and great for the publisher because they arent getting a cut in pay like the 30% cut from Apple. I agree that it could be viewed as a monopoly if no one ever bought ebooks from B&N or Apple though.


I thought that was called "dumping" and is illegal. It's only used as a means to crush competition by making it impossible for any other business to compete, while Amazon can afford to take the loss for a while until the other guys go out of business.
Rating: 13 Votes
16 months ago

I agree that it could be viewed as a monopoly if no one ever bought ebooks from B&N or Apple though.


Yeah, it could be "viewed" like that. Imagine if Carlos Slim Helu, with his $73,000,000,000 fortune decided to pay publishers whatever they wanted for e-books and sell them to us for a nickel. What does he care? His billion-dollar businesses cover the loss a billion times over and he still goes to bed filthy rich. Plus no one buys e-books from anyone else. And while they're shopping for e-books, maybe they'll buy an America Movil phone card.

Now you understand the Amazon e-book model. And the DOJ has a problem with ... wait for it ... Apple.
Rating: 12 Votes
16 months ago
How about DOJ investigate
- Amazon's predatory monopoly
- high health care price in the US
- Google / Samsung using SEPs as weapons
Rating: 10 Votes
16 months ago

I would have to say you are wrong on both counts of it being bad. If Amazon is willing to buy an ebook for $10 and sell it for $7, then that is great for the consumers because they get it for cheaper and great for the publisher because they arent getting a cut in pay like the 30% cut from Apple. I agree that it could be viewed as a monopoly if no one ever bought ebooks from B&N or Apple though.


If price is the only factor, then selling at a loss undercuts sellers that require a profit to operate, i.e., most anybody in business.

Amazon sells best sellers at a loss and makes it up on sales of unrelated products. To me, that is predatory pricing.
Rating: 10 Votes

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