US judge finds Apple guilty of anti-competitive practices — of conspiring to raise e-book prices


In a rather unsurprising news, a US federal judge has ruled that Apple has colluded with five publishers to raise the prices of e-books in the United States. This collusion took place months in advance of Apple’s Jan 2010 iPad launch, during which Apple talked with e-book publishers in regards to not only raising e-book prices but doing it across the industry to prevent competition — namely Amazon — from undercutting iBookstore prices.

With this ruling, the federal judge also said that the U.S. government and various states will be granted with injunctive relief. Hence Apple will have to pay for damages inflicted due to the e-book pricing conspiracy. The amount of damages will be determined via a new trial.

U.S. District Judge Denise Cote in Manhattan said that the conspiracy has led to the pricing of e-books to rise to $12.99 or $14.99 as compared with the pricing set by Amazon which was $9.99. This happened because Apple forced the five publishers to agree to a contract that stated the publishers must offer e-books in Apple’s iBookstore at the lowest price on the market; since Apple and publishers agreed to a $12.99/$14.99 model, that meant the publishers could not sell their e-books via other distributors for lower prices. This then forced the publishers to renegotiate with Amazon and force Amazon to raise prices past Amazon’s $9.99.

Speaking of Amazon, the U.S. Department of Justice said that the conspiracy was aimed at undercutting Amazon’s dominance of the e-book market which was growing steadily fast since 2009.

While Apple was not the sole conspirator, the five publishers did not go into trial since they have settled with the government out of court. These publishers are Hachete Book Group and Macmillan, HarperCollins, Penguin, Simon, and Schuster.

Reacting to the decision, an Apple spokesperson has issued a statement via Techcrunch:

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.

So there you go folks. For those of you who regularly purchase e-books, let’s hope that this case will bring prices of e-books down.

[via Reuters, TechCunch, image via App Store]

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