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Judge scolds Apple for lack of remorse in e-book antitrust case

Joab Jackson | Aug. 12, 2013
A federal judge took Apple to task on Friday for showing no contrition about potentially defrauding its customers of hundreds of millions of dollars.

A federal judge took Apple to task on Friday for showing no contrition about potentially defrauding its customers of hundreds of millions of dollars.

"None of the publishers nor Apple have expressed any remorse" about colluding to fix electronic book prices in 2010, said District Judge Denise Cote, of the U.S. District Court for the Southern District Court of New York. "They are, in a word, unrepentant."

Additionally, Cote expressed dissatisfaction that Apple had not taken any steps to modify its business practices, such as establishing internal compliance monitoring, to prevent it from undertaking similar behavior in the future.

Cote addressed this charge to Apple's attorneys at a hearing held Friday to discuss remediation, or the actions the court would take to compensate consumers and prevent further price-fixing.

Last month, Cote ruled that Apple violated the Sherman Antitrust law when it contracted with five of the six largest book publishers to provide e-books to Apple's book-reading app for its then newly launched iPad .

On Friday, Cote reviewed proposed settlements that were submitted by both Apple and the plaintiffs, namely the U.S. Department of Justice and the 33 state attorneys general. In 2012, the DOJ and the states brought an antitrust case against Apple and Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster for working together to set prices of electronic books.

The DOJ and the states had convinced Cote that Apple and book publishers had conspired to raise prices in the e-book market in 2010, in an effort to stop Amazon from pricing their best-selling electronic books at US$9.99.

The publishers all settled out of court prior to the trial, which began in June, and have earmarked $164 million for restitution.

Cote did not decide on what a proper remediation should be, but rather set up a series of meetings to be held over the next few weeks among Apple, the DOJ and the attorneys general to determine if they had any areas of agreement to establish a settlement.

Despite Apple's apparent hubris, Cote said she wanted to make the remediation as narrow as possible to minimize unnecessary government intervention in the e-book market.

The injunction should only try to restore competitive pricing in the electronic book market, to prevent Apple from colluding with publishers in the future, and to award appropriate — though not overly punitive — damages to e-book consumers, Cote said.

She stated she would rather not establish an external monitor to watch Apple, expressing hope that the injunction be structured in a way that an external watchdog would not be needed. Nor did she wish to force Apple to change its policies on how it runs its app store.

 

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