Legal Experts Suggest Justice Department Unlikely to Win Antitrust Suit Against Apple

In the wake of yesterday's announcement that the U.S. Department of Justice has filed an antitrust lawsuit against Apple and a number of book publishers over alleged price fixing, CNET notes that the government may have a hard time winning its case against Apple. The publishers may, however, find themselves on the losing end of the case should they be unwilling to settle.

"It's a harder case against Apple than the publishers," says Geoffrey Manne, who teaches antitrust law at the Lewis and Clark Law School in Oregon and runs the International Center for Law and Economics.

One reason lies in the Justice Department's 36-page complaint, which recounts how publishers met over breakfast in a London hotel and dinners at Manhattan's posh Picholine restaurant, which boasts a "Best of Award of Excellence" from Wine Spectator magazine. The key point is that Apple wasn't present.

But even the case against the publishers is not a sure thing for the Department of Justice. Some experts suggest that even amid claims that the publishers met to discuss a shift to an agency model being championed by Apple, the publishers may not be found guilty of antitrust violations.

Specifically, the Supreme Court has ruled in the past that pricing arrangements among competitors are not automatically considered to be violations of antitrust law, and that the setting of minimum retail pricing by manufacturers is a permitted policy.

ibooks ipad hand
Several of the publishers involved in the lawsuit have already settled, but Macmillan and Penguin are holding out along with Apple to fight the case. Almost immediately following the filing of the Department of Justice's lawsuit, a number of states filed their own claims against the companies, citing customer overcharges of over $100 million since the move to an agency model of pricing. Regulators in other countries are also reportedly looking at whether they wish to take action on the matter.

Top Rated Comments

diamond.g Avatar
141 months ago
So they weren't even present, and the publishers control the price? Umm.... why is Apple being sued again?

I thought it was due to the "Most Favored Nation" clause?
Score: 8 Votes (Like | Disagree)
LaWally Avatar
141 months ago
So they weren't even present, and the publishers control the price? Umm.... why is Apple being sued again?
Apple is being sued because it has agreements with the publishers who are accused of trying to use the agency model to allegedly price fix and is therefore considered complicit in the act. Apple is in effect "aiding and abetting" the alleged price fixing in the government's eyes by providing a vehicle through which the publishers can price fix.
Score: 7 Votes (Like | Disagree)
spiderman0616 Avatar
141 months ago
If Apple or the other publishers lose this battle, you are going to see Amazon being turned into the Walmart of e books. They can just undercut like crazy until everyone else shrivels and dies. It's suing one problem and protecting a whole other problem.

I personally like the agency model because it actually supports the industry. I'm not defending Apple's methods, because I still don't know if they're guilty of anything illegal or not, but I'm just saying that I'm not in favor of paying less for something if in turn it kills the company providing the content to me.
Score: 7 Votes (Like | Disagree)
IJ Reilly Avatar
141 months ago
The MFN clause itself is not a problem. The DOJ was alleging that Apple participated in a conspiracy to engage in price fixing. If they participated in a meeting where they and the publishers discussed a strategy to engage in price fixing, that could be a problem.

However, it would not be a problem if Apple simply individually negotiated terms with each publisher, even if the publishers told Apple what other deals they received, or if Apple told the publishers what other publishers were willing to accept. Unilateral action is OK, and revealing other deals is a legitimate attempt to gain leverage. That's the crux of Apple's defense in the separate class action lawsuit.

QFT. The CNET article is heavily spun, which is not surprising considering who wrote it. Legal analysts are going to be all over the map at this point, if only because they've seen only the government's complaint, not Apple's or the publisher's responses. But if you quote libertarian think tanks you are going to get predicable results.

Obviously it's the publishers who are at the pointiest end of the stick, but I don't think Apple needs to have been present at any meetings to be found a party to price fixing. It's going to be difficult to claim that all of these publishers came to the same terms with Apple by mere coincidence. The one quoted email from Jobs pretty much refutes that theory anyway.

All antitrust cases are difficult for the government to prosecute. Citing the DoJ's failures in recent history isn't telling close to the whole story, since most of these cases never make it to trial. They are overwhelming settled out of court by consent decrees, in which the government typically gets at least some of the changes they are seeking. Mr. McCullagh doesn't share that little factoid with us because it doesn't make the government look blithering.
Score: 6 Votes (Like | Disagree)
Amazing Iceman Avatar
141 months ago
Another waste of taxpayer dollars... :rolleyes:

Yep. The DOJ should be more concerned about regulating the price of gasoline and food, so we the consumers don't have to keep paying those outrageous prices. People can choose to buy or not to buy a book, but people have no other choice than to buy gas and food.

What happened to paying under $1 per gallon?
Score: 5 Votes (Like | Disagree)
Evan_11 Avatar
141 months ago
They essentially killed book stores buy undercutting them so there are few left, and did the same to ebooks with 90% of the market because they were selling below cost.

Amazon didn't kill the small book stores. Barnes & Noble and Borders did. Amazon then killed Barnes & Noble and Borders.
Score: 4 Votes (Like | Disagree)

Popular Stories

iOS 16

iOS 16.3 Now Available for Your iPhone With These 4 New Features

Friday February 3, 2023 1:13 pm PST by
Apple released iOS 16.3 in late January following nearly six weeks of beta testing. The software update is available for the iPhone 8 and newer, and while it is a relatively minor update, it still includes a handful of new features, changes, and bug fixes. Below, we've recapped new features in iOS 16.3, including support for physical security keys as a two-factor authentication option for...
iPhone 14 Pro Purple Side Perspective Feature Purple

Gurman: Apple Considering New High-End iPhone Alongside Pro and Pro Max

Sunday February 5, 2023 6:07 am PST by
Apple has discussed selling a new top-of-the-line iPhone alongside the Pro and Pro Max models in 2024 at the earliest, according to Bloomberg's Mark Gurman. Based on this timeframe, the device would be part of the iPhone 16 lineup or later. In a September 2022 edition of his weekly "Power On" newsletter, Gurman said there was "potential" for an iPhone 15 Ultra to replace the iPhone 15 Pro...
ipad air purple

Deals: M1 iPad Air Hits Record-Low Prices at TigerDirect, Starting at $313.99 (48% Off) [Updated]

Saturday February 4, 2023 10:05 am PST by
Online retailer TigerDirect has slashed pricing on the M1 iPad Air in several colors, offering the base 64GB configuration for just $313.99 in Purple and Pink. Note: MacRumors is an affiliate partner with TigerDirect. When you click a link and make a purchase, we may receive a small payment, which helps us keep the site running. That's a savings of 48% compared to Apple's normal $599.00...
mac studio pink

Apple May Not Launch Updated Mac Studio With M2 Ultra Chip Due to Similarity With Upcoming Mac Pro

Sunday February 5, 2023 6:06 am PST by
A new version of the Mac Studio with the "M2 Ultra" chip is unlikely to arrive in the near future, according to Bloomberg's Mark Gurman. In the latest edition of his "Power On" newsletter, Gurman explained that since the upcoming Apple silicon Mac Pro is "very similar in functionality to the Mac Studio," Apple may wait until the release of M3- or M4-series chips to update the machine, or...
HomePod 2 White and Midnight Feature Purple Orange

Apple Releases tvOS 16.3.1 and HomePod 16.3.1 Software Updates

Monday February 6, 2023 10:13 am PST by
Apple today released new tvOS 16.3.1 and HomePod 16.3.1 software updates, with the software coming two weeks after the tvOS 16.3 and HomePod 16.3 updates were released. According to Apple's release notes for HomePod software 16.3.1, the update includes general performance and stability improvements. Notes for tvOS 16.3.1 are unavailable as of yet, but are probably similar to the HomePod...
iPhone 15 Pro Blue Feature

iPhone 15 Pro 'Buttonless Design' Rumors: Everything We Know

Monday February 6, 2023 7:44 am PST by
The iPhone 15 Pro models will feature a "buttonless design" thanks to additional Taptic Engines, according to multiple corroborated reports, so what do we know about the change so far? Apple analyst Ming-Chi Kuo was first to report that the volume and power buttons on this year's two high-end iPhone models will adopt a solid-state design, similar to the iPhone 7's home button, replacing a...
iphone ultra concept daehnert

'iPhone Ultra' Concept Envisions Apple's Rumored Future Top-Tier Smartphone

Tuesday February 7, 2023 5:38 am PST by
Apple has reportedly considered releasing a new top-of-the-line iPhone alongside future Pro and Pro Max models, tentatively referred to as "iPhone Ultra," and one designer has taken it upon himself to envision what such a device could potentially look like. German industrial designer Jonas Daehnert came up with this impressive-looking concept (pictured) by marrying design elements of the...
webkit vs chromium feature

Google Working on Browser for iOS That Would Break Apple's App Store Rules

Saturday February 4, 2023 1:30 am PST by
Google's Chromium developers are working on an experimental web browser for iOS that would break Apple's browser engine restrictions, The Register reports. The experimental browser, which is being actively pursued by developers, uses Google's Blink engine. Yet if Google attempted to release it on the App Store, it would not pass Apple's App Review process. Apple's App Store rules dictate...