Will the Apple e-book price-fixing case be turned upside down?

During an appeals court hearing on the Department of Justice's price-fixing case against Apple, some judges argued against the DOJ, asserting that Apple was simply challenging 'predatory' pricing from rival Amazon.

Kimberly White/Reuters
In 2010, Apple CEO Steve Jobs announced that several big US publishers would be licensing e-books on the iPad. In 2012, Apple and the publishers were accused by the US government of conspiring to fix prices of e-books and limit retail price competition.

The Department of Justice faced tough questioning from a judge who questioned Apple's conviction in the e-book price-fixing case in which the DOJ sued Apple and five publishers for conspiring to fix e-book prices in competition with Amazon.

During an appeals court hearing Monday, some judges took a hostile stance toward the DOJ's case, arguing that Apple was simply challenging "predatory" pricing from rival Amazon.

Judge Dennis Jacobs, openly critical of the decision, questioned why the DOJ was after Apple, then a new entrant to the e-book market, when an established "monopolist" (Amazon) was maintaining a monopoly on the market with "predatory pricing."

"What we're talking about is a new entrant who is breaking the hold of a market by a monopolist who is maintaining its hold by what is arguably predatory pricing," Judge Jacobs said, according to a report from the AFP.

“It’s like all the mice getting together to put a bell on the cat,” Judge Jacobs added.

At the time Apple entered the e-book market, Amazon held between 80 percent and 90 percent of the market. The Justice Department sued Apple in 2012 for antitrust violations. After a three-week trial, U.S. District Judge Denise Cote in Manhattan ruled last year that Apple was liable for "facilitating and encouraging" a collective effort by the publishers to end price competition for e-books.

Theodore Boutrous, an attorney representing Apple, told the appeals court Monday that Cote's ruling was "a roadblock that chills innovation and competition." The decision discourages new entrants into a market, "which the court has said is the essence of competition," he said.

But Malcolm Stewart, an attorney with the DOJ, said Apple's entry into the market raised e-book prices for many consumers.

He argued that Amazon's policies were not "predatory pricing," but that its standard $9.99 price on many bestsellers was "good for consumers."

The sharp challenge could foretell a change in the decision on the price-fixing case – and change a precedent in e-book pricing models.

If Apple loses the appeal, it would pay $450 million, most of it to e-book consumers, as part of a settlement in the DOJ's lawsuit.

But it's too soon to tell which way the appeal will go, as Mac Observer cautioned.

"The first thing to keep in mind is that interpreting questions from a judge at the appellate level or higher is risky business," it said. "A judge might be hounding one side or another because they disagree with that side in some way, but judges have also been known to press an attorney – or be openly critical – because they're wanting to make sure that side's argument hold[s] water, are thorough, or just to play devil's advocate."

The appeal court's ruling is expected in 2015.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Will the Apple e-book price-fixing case be turned upside down?
Read this article in
QR Code to Subscription page
Start your subscription today