NEW YORK – The Supreme Court Monday declined to hear Apple Inc’s appeal against a ruling and $450 million settlement for a price fixing conspiracy with five publishers, leading to substantially higher charges for electronic books.
The Supreme Court’s action triggers Apple’s obligation to pay $450 million under a July 2014 agreement reached by the US tech giant to settle damages actions brought by the attorneys general of 33 states and territories and a private class of e-book purchasers.
The settlement includes $400 million to e-book purchasers, $30 million in legal fees and $20 million to states involved in the lawsuit
Most e-book purchasers will receive reimbursement for the higher prices Apple’s conduct caused them to pay through automatic credits at their e-book retailers, the Department of Justice said in a statement.
The affected purchasers will be able to apply these credits to future purchases. With the $166 million previously paid by the conspiring publishers to settle claims against them, Apple’s payment will bring to $566 million the amount repaid to e-book purchasers overcharged as a result of Apple’s and the publishers’ illegal conspiracy.
“Apple’s liability for knowingly conspiring with book publishers to raise the prices of e-books is settled once and for all. And consumers will be made whole,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.
“The outstanding work of the Department of Justice team working with our steadfast state attorney general partners exposed this cynical misconduct by Apple and its book publisher co-conspirators and ensured that justice was done.”
For the launch of the iBookstore, Apple along with the book publishers had adopted so-called “agency” pricing model, that allowed publishers to control the prices of books and prevented resellers like Amazon from undercutting those rates. The subsequent increase in e-book prices led the government to take action.
On April 11, 2012, the department filed its civil antitrust lawsuit challenging Apple’s orchestration of a price-fixing conspiracy with five e-book publishers: Hachette Book Group (USA), HarperCollins Publishers L.L.C., Holtzbrinck Publishers LLC (which does business as Macmillan), Penguin Group (USA) Inc. and Simon and Schuster Inc.
The department reached settlements with the defendant publishers before trial and, along with the plaintiff states, proceeded to trial against Apple before US District Judge Denise L. Cote of the Southern District of New York on June 3, 2013.
Judge Cote issued her opinion and order on July 10, 2013, finding Apple liable for orchestrating a conspiracy with the publishers to fix prices and end e-book retailers’ freedom to compete on price. On June 30, 2015, the US Court of Appeals for the Second Circuit affirmed Judge Cote’s decision.
Subsequent to the court case, the “wholesale model” preferred by Amazon has been adopted. The model allows resellers to set prices, and sell titles at or below costs if they so choose. READ MORE OF THIS STORY