Ondrej Holzman The Court of Appeal did not hear Apple's appeal against a 2013 ruling that convicted it of manipulating and raising the price of e-books when it entered the market. The California company should now pay up already agreed upon 450 million dollars, most of it will go to customers.
A Manhattan appeals court ruled on Tuesday after three years of protracted legal battles in favor of the original verdict, in favor of the US Department of Justice and 33 states that joined it in suing Apple. The lawsuit arose in 2012, a year later Apple was found guilty and then you heard the punishment.
While publishers Penguin, HarperCollins, Hachette, Simon & Schuster, and Macmillan decided to settle out of court with the Department of Justice (paying $164 million), Apple continued to maintain its innocence and decided to take the whole case to trial. That's why he opposed the unfavorable judgment a year ago called off.
In the end, the appeal process lasted another more than a year. At the time, Apple claimed that its only competitor in entering the e-book market was Amazon, and since its price of $9,99 per e-book was well below the competitive level, Apple and publishers had to come up with a price tag that would be for the iPhone maker profitable enough to start selling e-books.
[su_pullquote align=”right”]We know we did nothing wrong in 2010.[/su_pullquote]
But the appeals court did not agree with this argument of Apple, even though in the end the three judges decided against the California company in a close ratio of 2:1. Apple allegedly violated the Sherman Antitrust Act. "We conclude that the circuit court was correct in holding that Apple conspired horizontally with publishers to raise the price of e-books," Judge Debra Ann Livingston said in the appeals court's majority verdict.
At the same time, in 2010, when Apple entered the market with its iBookstore, Amazon controlled 80 to 90 percent of the market, and publishers did not like its aggressive approach to prices. That's why Apple came up with the so-called agency model, where it itself received a certain commission from each sale, but at the same time publishers could set the prices of e-books themselves. But the condition of the agency model was that as soon as another seller started selling e-books cheaper, the publisher would have to start offering them in the iBookstore at the same price.
Therefore, as a result, publishers could no longer afford to sell books on Amazon for less than $10, and the price level increased across the entire e-book market. Apple tried to explain that it didn't target publishers against Amazon's prices on purpose, but an appeals court ruled that the tech firm was well aware of the consequences of its actions.
"Apple knew that the proposed contracts were attractive to the defendant publishers only if they collectively switched to an agency model in their relationship with Amazon — which Apple knew would lead to higher e-book prices," Livingston added in a joint ruling with Raymond Lohier.
Apple now has the opportunity to turn the whole case to the Supreme Court, it continues to insist on its innocence. “Apple did not conspire to raise the price of e-books, and this decision does not change things. We are disappointed that the court did not recognize the innovation and choice that the iBookstore brought to customers," the California-based company said in a statement. "As much as we want to put him behind us, this case is about principles and values. We know we did nothing wrong in 2010 and we are considering the next steps.”
Judge Dennis Jacobs sided with Apple at the appeals court. He voted against the original decision of the circuit court from 2013, when, according to him, the whole matter was handled poorly. Antitrust law, according to Jacobs, cannot accuse Apple of collusion between publishers at different levels of the business chain.
Whether Apple will actually appeal to the Supreme Court is not yet certain. If he doesn't, he could soon start paying out the 450 million he agreed with the Department of Justice to compensate customers.
