Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Judgment in ebook case limits Apple's deals, appoints external monitor

Dan Moren | Sept. 9, 2013
The injunction, which takes effect 30 days from its issuance on Thursday, imposes several restrictions on the way Apple can conduct its ebook business over the next several years.

ebooks

The other shoe has dropped: U.S. District Court Judge Denise Cote on Friday issued a permanent injunction against Apple in the ebook price-fixing suits brought against it by the Department of Justice as well as a similar case brought by 31 U.S. states, the District of Columbia, and Puerto Rico. The injunction, which takes effect 30 days from its issuance on Thursday, imposes several restrictions on the way Apple can conduct its ebook business over the next several years.

"We're pleased that the court has issued an order supporting the Department of Justice's efforts to address Apple's illegal price fixing conduct," said Assistant Attorney General Bill Baer of the DOJ's Antitrust Division in a statement on the agency's website. "Consumers will continue to benefit from lower ebooks prices as a result of the department's enforcement action to restore competition in this important industry. By appointing an external monitor to ensure future compliance with the antitrust laws, the court has helped protect consumers from further misconduct by Apple. The court's ruling reinforces the victory the department has won for consumers."

Apple, however, is not yet ready to give up the fight. On Friday, company spokesperson Tom Neumayr told Macworld via email: "Apple did not conspire to fix ebook pricing. The iBookstore gave customers more choice and injected much needed innovation and competition into the market. Apple will pursue an appeal of the injunction."

The cost of doing business
Most significantly, the terms of the final judgment dictate what manner of agreement Apple may make with the five publishers—Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster—with whom the company was accused of conspiring. Unsurprisingly, Apple is not allowed to make any deals with those publishers that would potentially restrict Apple's ability to offer cheaper ebooks. Those restrictions expire on a per-publisher basis: it may renegotiate with Hachette after 24 months, HarperCollins after 30 months, Simon & Schuster after 36 months, Penguin six months after that, and Macmillan another six months after that.

Crucially, such deals may not include any "most-favored nation" clause, which was one of the issues at the heart of the case. That practice prevented other retailers with whom the publishers had deals from undercutting Apple's ebook prices by offering discounted prices. More generally, the judgment says Apple may not take part in any deal with publishers or retailers that would see ebook prices rise or be set at a particular level.

Of course, Apple is also barred from talking to publishers about its deals with any other publishers, or those companies' strategies, pricing plans, agreements with authors, and so on. And the company may not take any retaliatory action against any publishers, regardless of whether or not Apple has an existing agreement with them.

 

1  2  3  Next Page 

Sign up for CIO Asia eNewsletters.