Apple Found Guilty of Price Fixing
Apple has been found guilty of a conspiracy to fix the price of eBooks, after a court battle with the US Department of Justice. The company could be forced to pay hundreds of millions of dollars in damages, after it failed to explain the emails written by its late founder, Steve Jobs, about price negotiations with eBook publishers.
In one of the emails, Mr Jobs wrote to the deputy chief operating officer of News Corp, Mr Murdoch, that they had an opportunity to “create a real mainstream e-books market at $12.99 and $14.99″. In another message which was drafted but never sent, Mr Jobs suggested publishers forced Amazon to adopt the same model of pricing.
Apple was accused of price fixing in 2012 together with five of the six major publishers. Several publishers agreed to settlements with the DoJ, by early 2013, leaving Apple the only company facing a trial.
Publishers that were involved in price fixing with Apple and settled with DoJ are: Hachette, Macmillan, Penguin, HarperCollins, and Simon & Schuster publishing groups. The only major publisher not included was Random House, which has now merged with Penguin. These companies were ordered to end agency pricing agreements for two years, and to stop “most favored nation” agreements that could guarantee Apple the lowest prices, as part of their settlement.
Judge Denise Cote has found that “the Plaintiffs have shown not just by preponderance of the evidence but through compelling direct and circumstantial evidence that Apple participated in and facilitated a horizontal price-fixing conspiracy.”
She also added that without Apple’s orchestration of this conspiracy, it would not have succeeded. Apple and publishers shared an “overarching interest” in cutting down Amazon’s lead, and “Apple seized the moment and brilliantly played its hand.”
In a statement given to The Verge, Apple spokesperson Tom Neumayr quickly vowed to appeal the decision, saying, “Apple did not conspire to fix eBook pricing and we will continue to fight against these false accusations. When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong and we will appeal the judge’s decision.”
The Department of Justice has called it “a victory for millions of consumers who choose to read books electronically.”