Apple conspired with five major U.S. publishers to artificially increase prices of electronic books before the iPhone and iPad manufacturer entered this market, ruled a the U.S. District Judge Denise Cote in an antitrust lawsuit filed by the Justice Department. The judge found “compelling evidence” that the giant multinational corporation headquartered in Cupertino, California played a “central role” in a conspiracy with publishers to get rid of the retail price competition and raise the prices of e-books.
Justice Department accused Apple of conspiring with the publishers in January 2010 to enable them to set higher prices for books with higher sales and newly launched in response to the problem created for publishers by low prices imposed by the online retailer Amazon. Publishers saw Apple’s entry into the electronic book market as an opportunity to move from the low prices of the Amazon to higher prices set by them.
In the context of preparations for the launch of iPad, Apple has suggested a model in which publishers set the price of books, and Apple to receive a share of 30% of the amount. Apple also demanded from the publishers to not allow rival retailers sell the same books at lower prices. Price of some e-books rose to $12.99 or $14.99 from $9.99, the price that Amazon charged.
Prices rose after the agreement between Apple and publishers, U.S. authorities said.
“Apple chose to join forces with the publisher defendants to raise e-book prices and equipped them with the means to do so. Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did,” said the judge in her 159-page decision.
All five publishers signed settlements with the Department of Justice and a group of attorneys general of several U.S. states. Apple refused to settle and went to court. Last year, Apple has settle with the European Commission to close an investigation into e-book pricing. This settlement did not expose the company to private lawsuits.
Apple will appeal Judge Cote’s decision: “Apple did not conspire to fix e-book pricing. When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong,” said Apple spokesman Tom Neumayr.
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