Apple caused ‘consumer harm’ with ebook conspiracy

Karen Haslam
25 August, 2012
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The US Department of Justice is claiming that Apple’s supposed conspiracy with book publishers has caused “unmistakable consumer harm”, and is calling for the Judge to approve the settlement without a hearing.

The request is in response to Apple’s request to block a summary judgment.

Last week Apple opposed a government proposed judgment in the ebooks price-fixing lawsuit, stating that the judgment seeks to terminate and rewrite its contracts “before a single document has been introduced into evidence, before any witness has testified, and before the court has resolved the disputed facts.”

The DoJ said: “Apple’s desire to avoid price competition for as long as possible is the unstated reason why it seeks to undo or forestall the settlements.”

Without Apple’s consent and without a trial, the proposed judgment automatically terminates Apple’s agreements and effectively bars Apple and other retailers from selling ebooks under the agency model for two years, Apple said in the filing before the US District Court for the Southern District of New York.

The DoJ argues that the ebook trade is unlike any other industry: “The government fails to understand that the sale of ebooks is unlike other businesses, and that the application here of long-settled prohibitions against price-fixing risks ruin for the industry,” reads the memo.

The DoJ writes: “While e-books are a relatively new arrival on the publishing scene, a plea for special treatment under the antitrust laws is an old standby. Railroads, publishers, lawyers, construction engineers, health care providers, and oil companies are just some of the voices that have raised cries against ‘ruinous competition’ over the decade. Time and time again the courts have rejected the invitation to exempt particular businesses from the reach of the Sherman Act.” (The Sherman Antitrust Act prohibits business activities that reduce competition in the marketplace).

“Suggestions that the antitrust laws are of no use when it comes to ebooks are especially remarkable in light of the unmistakable consumer harm that resulted from the conspiracy in this case,” claims the DoJ.

The DoJ memo also claims that Apple’s deals with publishing houses caused a substantial increase in ebook pricing “almost literally overnight”.

Back in April the Department of Justice filed an antitrust lawsuit against Apple and five large publishers, accusing the companies of working together to raise prices of ebooks, in retaliation for competitor pricing most ebooks at US$9.99 beginning in late 2007.

The case is scheduled for trial in June 2013.

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