A closer look at the proposed Apple e-book agreement
Accused of conspiring with publishers to raise the standard prices of e-books and collect a 30 percent commission on the transactions, Apple is ready to pay out more than $400 million in damages in the wake of three possible outcomes in the case.
In July 2013, Judge Denise Cote ruled that Apple conspired with publishers in a price-fixing scheme in which the tech company sold e-books well above the market standard Amazon had set for years. Though the five accused publishers have already settled for $166 million, Apple's appeal of the matter could result in the tech company being absolved of the allegations and freeing it of financial responsibility.
The two other outcomes could see Apple settling for over $400 million and paying at least $20 million in court costs or Apple may end up coming to terms on recompense as low as $50 million, if the appeals court sends the case back down for another hearing. But with compensatory damages already assessed on the defending publishers, New York Attorney General Eric T. Schneiderman expressed optimism that the plaintiffs would enjoy proportional success against Apple.
"In a major victory, our settlement has the potential to result in Apple paying hundreds of millions of dollars to consumers to compensate them for paying unlawfully inflated e-book prices," stated Schneiderman. "We will continue to work with our colleagues in other states to ensure that all companies compete fairly with the knowledge that no one is above the law."
An Apple attorney asserts that the suit's plaintiffs can't source a single, defining case in which a court applied antitrust laws to a company attempting to compete in a market held by only one organization. The attorney deemed Cote's 2013 ruling (PDF) a "reversible error."
"Never before has a court found a company liable under the antitrust laws for entry into a market dominated by a single company, through admittedly vertical and lawful distribution agreements, to launch an enterprise that the court admitted benefited consumers and competition, where the company did not desire higher prices and the agreements did not specify prices to be charged, and which resulted in more competition, lower market prices, and increased market output," Apple attorneys stated.
To push the launch of its iPad in 2009, Apple allegedly colluded with publishers to set the retail prices of their e-books significantly higher than the $9.99 price Amazon had set across the board since 2007. The agreement also allowed Apple to follow suit and stay competitive, if Amazon decided to absorb the retail prices of some of the e-books.