Apple did conspire with publishers in the US to fix the prices of e-books, an appeal court has found.
The technology company had appealed against an earlier decision by Judge Denise Cote, who said that Apple and publishers were guilty of conspiring to raise the prices of e-books. Apple appealed the decision and yesterday the Second Circuit Court of Appeals upheld Cote's decision.
Judge Deborah Ann Livingston said in the judgment: "We conclude that the district court correctly decided that Apple orchestrated a conspiracy among the publishers to raise e-book prices, that the conspiracy unreasonably restrained trade in violation of the Sherman Act, and that the injunction is properly calibrated to protect the public from future anticompetitive harms. In addition, we reject the argument that the portion of the injunctive order preventing Apple from agreeing to restrict its pricing authors modifies Macmillan and Simon & Schuster's consent decrees or should be judicially stopped. Accordingly the judgment of the district court is affirmed."
However, while two judges backed Cote's ruling, a third from the Second Circuit Court of Appeals dissented.
Judge Dennis Jacobs ruled that "Amazon’s 90 percent market share constituted a monopoly under antitrust law" and that "collusion among competitors does not describe Apple’s conduct or account for its motive". He added: "Apple took steps to compete with a monopolist and open the market to more entrants, generating only minor competitive restraints in the process. Its conduct was eminently reasonable; no one has suggested a viable alternative."
But the court argued that the dissenting judge said Apple was challenging Amazon, going on the theory that "the presence of a strong competitor justifies a horizontal price-fixing conspiracy" which "endorses a concept of marketplace vigilantism that is wholly foreign to the antitrust laws".
"Plainly, competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new e-book retailer at the expense of passing control over all e-books to a cartel of book publishers—publishers who, with Apple’s help, collectively agreed on a new pricing model precisely to raise the price of e-books and thus protect their profit margins and their very existence in the marketplace in the face of the admittedly strong headwinds created by the new technology," said the judgement.
In response to yesterday's decision, Apple said it was assessing its opinions, reported Publishers Weekly. "We are disappointed the court does not recognise the innovation and choice the iBooks Store brought for consumers,” the statement said. “While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps."