Apple found guilty of e-book price hike conspiracy
A US Federal Judge ruled that Apple colluded with publishers to raise e-book prices violating antitrust laws.
Shannon Stapleton/ Reuters/ File
A US District judge found Apple guilty of conspiring to raise e-book prices in violation of antitrust laws. In a Wednesday statement, Judge District Cote writes that Apple is liable for “facilitating and encouraging” price fixing with five major publishing companies, rejecting Apple’s argument that it never intended to conspire with publishers.
Apple was accused of raising the price of e-books to $12.99 and $14.99 in agreements with five publishing companies – Hachette, HarperCollins, Simon & Schuster, Macmillan, and Penguin – with the launch of the iBookstore in 2010.
At that time, Amazon.com held 90 percent of the e-book market, and sold books, which it purchased wholesale from publishers, at a flat-rate of $9.99 per book. Apple proposed paying publishers a more lucrative commission fee based on the number of books sold, and proposed setting up an agency model that allowed publishers to direct book prices. The publishers would agree to offer certain books exclusively through Apple at a higher price, a model which would undercut the appeal of Amazon.com's flat-rate pricing.
“Apple was an essential member of the charged conspiracy and was fully complicit in the scheme to raise e-book prices,” even though the publishers were also culpable, writes Judge Cote.
Though they admitted no wrongdoing, the five publishing companies accused of colluding with Apple all settled and agreed to issue approximately $175 million in consumer credits to customers.
“From the consumer’s perspective…the arrival of the iBookstore brought less price competition and higher prices,” according to the US District Court ruling.
Apple has denied that the company was involved in crafting a horizontal price-fixing scheme and plans to appeal the case.