Apple Loses Appeal in E-Books Price Fixing Lawsuit, Ordered to Pay $450 Million Fine

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ibooks-iconThe U.S. Court of Appeals for the Second Circuit today upheld a 2013 decision that found Apple guilty of conspiring with publishers to raise the prices of e-books, reports The Wall Street Journal. Apple is now expected to pay a $450 million fine originally set in July 2014 to settle the case, with a majority of that settlement earmarked for consumers as part of a class action lawsuit.

Apple filed the appeal in the antitrust case in December 2014, and the outcome was originally expected to favor the iPhone maker, although federal judge Debra Ann Livingston ultimately determined that the company colluded with publishers to fix the prices of e-books. The decision was finalized by a 2-1 ruling in the Second U.S. Circuit Court of Appeals in Manhattan on Tuesday.

"We conclude that the district court correctly decided that Apple orchestrated a conspiracy among the publishers to raise e-book prices,” wrote Second Circuit Judge Debra Ann Livingston. The conspiracy “unreasonably restrained trade” in violation of the Sherman Act, the federal antitrust law, the judge wrote.

The Wall Street Journal has shared the full-length court document for the decision.

Top Rated Comments

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69 months ago

How does Amazon get away with it then? They sell and sold books at under he market value short changing the authors. I'm far more on the side of over charging for creative content than under. In the USA it seems the consumer being charged a fair rate for goods is more important than companies being ripped apart by allowing them to price fix and undercut. That competition is good but not at the expense of the people who create that medium. I'm sure apple are guilty but not for doing the wrong thing in my eyes they stabilised the prices and brought down prices to realistic levels for all.

Two issues with the bolded:

1) Amazon doesn't set e-book prices. That's why Apple got his with this price fixing lawsuit. Apple got the publishers to agree to move to an agency model, where the publishers set e-book prices.

2) Apple didn't bring down prices - Apple raised them. From the point of view of antitrust, and economics, we want goods and service sold at the price dictated by the intersection of supply and demand. The idea of "ruinous competition" is basically discredited at this point. The consensus of most economists is that lower prices for the consumer are a good thing. Antitrust law seeks to protect consumers first and foremost.
Score: 7 Votes (Like | Disagree)
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69 months ago
Anyone here think Amazon's trade has been "unreasonably restrained"? Just asking.
Score: 7 Votes (Like | Disagree)
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69 months ago

Least Michael Bromwich the monitor is gone, right?

No, he is still in there and likely to be there for another few years to ensure Apple comply with this BS.

At least EU is looking at Amazon.
Score: 3 Votes (Like | Disagree)
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69 months ago

Anyone here think Amazon's trade has been "unreasonably restrained"? Just asking.

Well, Amazon was previously free to sell books at any price. Apple orchestrated a conspiracy which prevented them from being able to do so.
Score: 3 Votes (Like | Disagree)
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69 months ago

Two issues with the bolded:

1) Amazon doesn't set e-book prices. That's why Apple got his with this price fixing lawsuit. Apple got the publishers to agree to move to an agency model, where the publishers set e-book prices.

Amazon does set eBook prices ever since the publishers settled with the DOJ. The also did set eBook prices before Apple entered the market.

2) Apple didn't bring down prices - Apple raised them.

Apple didn't raise prices. Under the agency model, the publishers set prices, not Apple.

From the point of view of antitrust, and economics, we want goods and service sold at the price dictated by the intersection of supply and demand.

And yet before Apple entered the market, eBook prices were set almost entirely (90%) by Amazon. Not market forces.

The idea of "ruinous competition" is basically discredited at this point. The consensus of most economists is that lower prices for the consumer are a good thing. Antitrust law seeks to protect consumers first and foremost.

No. Antitrust law seeks to protect competition first and foremost. It is recent enforcement that seeks to put consumers over competition.
Score: 3 Votes (Like | Disagree)
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69 months ago
I feel like the justice department could have used a little more prosecutorial discretion here. I don't get the impression that the intent was to raise consumer costs above a fair level from any of the parties involved, nor does it seem they were trying to gain on Amazon so much as balance the field (the MFN clause).

Amazon selling eBooks at or below cost is, at best, only of short term consumer benefit. If Amazon goes on to hold 80%-90% of the market, does anyone think they won't then use that to squeeze publishers, price jab consumers or both? How is fair market value determined when they are the market?

Ignoring Apple for the moment, what could any new eBook seller do at this point to enter into the market and compete without a huge slush fund to operate at a loss? If the answer is not much/nothing then at the very least this investigation should be followed with a separate investigation of Amazon.
Score: 2 Votes (Like | Disagree)

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