Judge Ignores These Apple Appeals in DOJ Case
A U.S. judge has approved a settlement proposal between the U.S. Department of Justice and three book publishers who had been accused of conspiring with Apple (NASDAQ:AAPL) in raising e-book prices. Apple had tried to protest against the proposal and while U.S. District Judge Denise Cote accepted that comments on the settlement were “voluminous and overwhelmingly negative,” she said there was no excuse for price-fixing.
Earlier this year, the DOJ accused Apple of colluding with the five publishers on fixing e-book prices so that Amazon.com’s (NASDAQ:AMZN) dominance in the field was whittled down. HarperCollins (NASDAQ:NWSA), Simon & Schuster (NYSE:CBS), and Hachette Book settled, while Macmillan and Penguin Group (NYSE:PSO) are fighting on alongside Apple.
Barnes & Noble (NYSE:BKS) and the American Booksellers Association were among those protesting the settlement, accusing Amazon of selling books below cost to drive other sellers out of business. However, the arguments did not appease Cote. “Even if Amazon was engaged in predatory pricing, this is no excuse for price-fixing,” she wrote in her 45-page opinion. She added that there had been a “straightforward, horizontal price-fixing conspiracy.”
Under the settlement, the three publishers have agreed not to use Apple’s agency model, which allows publishers to set the price of e-books, for two years. The settlement calls for the three publishers to end their contracts with Apple within one week. In addition, the publishers can’t make contracts with retailers that include a most-favored nation clause for five years. “The time limits on these provisions suggest that they will not unduly dictate the ultimate contours of competition within the e-books industry as it develops over time,” Judge Cote wrote.
The trial for Apple and the two remaining publishers is due to start on June 3 next year.
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