Apple led conspiracy to raise prices of e-books, federal judge rules

NEW YORK — Apple conspired to raise the prices of e-books, a judge ruled Wednesday after a trial in which the Department of Justice accused the tech giant of aggressively pressuring publishers to raise prices and weaken Amazon.com.

More than two weeks after closing arguments, U.S. District Judge Denise Cote ruled that Apple is liable for civil antitrust violations.

"The plaintiffs have shown that Apple conspired to raise the retail price of e-books and that they are entitled to injunctive relief. A trial on damages will follow," Cote wrote in her opinion.

Five publishers accused of conspiring with Apple already settled with the government in the case: Penguin, HarperCollins, Simon & Schuster, Macmillan and Hachette Book Group.

Apple said it will appeal the ruling, the Associated Press reported.

In a trial that lasted three weeks, federal prosecutor Mark Ryan argued that when it entered the e-book market in April 2010, Apple offered publishers a way to fight back against Amazon by raising the prices of e-books. Prices went up shortly thereafter, and Apple negotiated 30 percent of the profits.

The government showed that Apple executive Eddy Cue was in contact via email and phone with representatives of the five publishers who ultimately signed agreements with the company, calls that led the publishers to switch how they distributed and priced their books.

Apple argued that the phone calls were benign negotiations and that it did not conspire with anyone. It accused Amazon, which sells the majority of e-books, of having a monopoly that was hurting consumers. Apple said it was going to trial, rather than settling, because it did nothing wrong.

Assistant U.S. Attorney General Bill Baer, who is in charge of the Justice Department's antitrust division, called the ruling "a victory for millions of consumers who choose to read books electronically."

In her ruling, Cote wrote that there is no doubt that publishers conspired to raise the prices of their e-books. They were afraid, she wrote, that Amazon's $9.99 price point for bestsellers would completely upset their business model. But Apple was the ringleader — publishers had tried to get Amazon to raise prices in 2009 and 2008 and had failed by themselves.

Apple led conspiracy to raise prices of e-books, federal judge rules 07/10/13 [Last modified: Wednesday, July 10, 2013 10:01pm]

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