The company was found guilty of conspiring with publishers to fix prices last year by U.S. District Judge Denise Cote. The decision was a controversial one with Cote accused of ruling before hearing the evidence after she pre-declared a "tentative view" that Apple was an antitrust violator before trial. She also allegedly appointed her friend an external monitor over Apple and granted him 'excessive inquisitorial powers' leading the WSJ to publish an article blasting the judge, calling her a 'disgrace to the judiciary'.
Apple has maintained its innocence throughout the process 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."
Apple SVP Eddy Cue recently spoke out about the case.
“Is it a fact that certain book prices went up?” asks Eddy Cue. “Yes. If you want to convict us on that, then we’re guilty. I knew some prices were going to go up, but hell, the whole world knew it, because that’s what the publishers were saying: ‘We want to get retailers to raise prices, and if we’re not able to, we’re not going to make the books available digitally.’ At the same time, other prices went down too, because now there was competition in the market.”
The ruling could have ramifications beyond the publishing industry by revealing “what kind of proof shows a conspiracy between manufacturers and a powerful distributor,” notes Harry First, a law professor at New York University. "This is a broad problem that many industries face. It’s not just Apple."
If Apple loses the appeal it will have to pay a pre-negotiated settlement of $450 million.
The WSJ notes that this case tests a government theory: that a distributor can facilitate a price-fixing conspiracy among competitors on a separate level of the supply chain.
Apple acknowledged that company executives met with publishers individually and discussed their frustrations with Amazon’s discounts and their desire to increase prices. But lawyers for the company argued in briefs filed in the appeals court that Judge Cote stretched the law to penalize benign conduct.
“Discussions between Apple and the publishers about price do not transform market entry via lawful agreements into unlawful price-fixing,” wrote Theodore J. Boutrous Jr. , a lawyer for Apple who will argue before the Second Circuit.
Apple says that Cote focused only on the negative aspects of Apple's deal with publishers rather than its positive impacts such as increased competition.
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