Source: http://techlawjournal.com/home/newsbriefs/2013/07b.asp
Timestamp: 2019-04-22 08:15:36+00:00

Document:
TLJ News: July 6-10, 2013.
7/10. The U.S. District Court (SDNY) released its Opinion and Order [160 pages in PDF] at the conclusion of the bench trial in U.S. v. Apple, finding that Apple conspired to raise e-book prices in violation of Section 1 of the Sherman Act.
The Court wrote that the U.S. and the state plaintiffs "have shown that the Publisher Defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy. Without Apple's orchestration of this conspiracy, it would not have succeeded as it did in the Spring of 2010."
The U.S. filed its complaint in April of 2012 against Apple and five e-book publishers -- Hachette, HarperCollins, and Simon & Schuster, Pearson/Penguin and Holtzbrinck/Macmillan. Texas and other states filed parallel complaint [redacted, 56 pages in PDF] the same day in the U.S. District Court (WDTex). The two actions were consolidated in the USDC/SDNY. Each of the five publishers settled with the DOJ before trial, leaving Apple the sole remaining defendant at trial in June.
The just released Opinion and Order finds that "Apple and the Publisher Defendants agreed to work together to eliminate retail price competition in the e-book market and raise the price of e-books above $9.99."
It continues that Apple "provided the Publisher Defendants with the vision, the format, the timetable, and the coordination that they needed to raise e-book prices. Apple decided to offer the Publisher Defendants the opportunity to move from a wholesale model -- where a publisher receives its designated wholesale price for each e-book and the retailer sets the retail price -- to an agency model, where a publisher sets the retail price and the retailer sells the e-book as its agent."
It also states that The agreements also included a price parity provision, or Most-Favored-Nation clause ("MFN"), which not only protected Apple by guaranteeing it could match the lowest retail price listed on any competitor’s e-bookstore, but also imposed a severe financial penalty upon the Publisher Defendants if they did not force Amazon and other retailers similarly to change their business models and cede control over e-book pricing to the Publishers. As Apple made clear to the Publishers, "There is no one outside of us that can do this for you. If we miss this opportunity, it will likely never come again."
"Through the vehicle of the Apple agency agreements, the prices in the nascent e-book industry shifted upward, in some cases 50% or more for an individual title. Virtually overnight, Apple got an attractive, additional feature for its iPad and a guaranteed new revenue stream, and the Publisher Defendants removed Amazon’s ability to price their e-books at $9.99."
The U.S., represented by the Department of Justice's (DOJ) Antitrust Division, filed its complaint on April 11, 2012 alleging that Apple and the five publishers violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring to increase the prices that consumers pay for e-books. See, stories titled "DOJ Sues Apple and Book Publishers Alleging E-Book Price Collusion", "Analysis of DOJ's Sherman Act Claim Against Apple and E-Book Publishers", and "Outside Reaction to DOJ E-Books Antitrust Action" in TLJ Daily E-Mail Alert No. 2,368, April 11, 2012.
Texas and other states filed a related complaint the same day. See, stories titled "States Sues Apple and E-Book Publishers" and "Commentary: Forum Selection in Antitrust Cases", also in TLJ Daily E-Mail Alert No. 2,368.
"Update on DOJ v. Apple eBooks Case" in TLJ Daily E-Mail Alert No. 2,437, August 25, 2012, and "District Court Approves Settlement in Apple E-Books Case" in TLJ Daily E-Mail Alert No. 2,442, September 6, 2012.
"DOJ Settles With Penquin in E-Books Antitrust Action" in TLJ Daily E-Mail Alert No. 2,494, December 19, 2012.
"DOJ Publishes Second Tunney Act Notice in Apple E-Books Antitrust Case" in TLJ Daily E-Mail Alert No. 2,500, December 31, 2012.
"Holtzbrinck/Macmillan Settles with DOJ in Apple E-Books Antitrust Action" in TLJ Daily E-Mail Alert No. 2,522, February 8, 2013.
The District Court conducted a trial without a jury from June 3 through June 20, 2013. The District Court issued its ruling on July 10.
Bill Baer (at right), head of the DOJ's Antitrust Division, stated in a release that "This result is a victory for millions of consumers who choose to read books electronically. After carefully weighing the evidence, the court agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster – to raise e-book prices. Through today’s court decision and previous settlements with five major publishers, consumers are again benefitting from retail price competition and paying less for their e-books."
He added that the plaintiffs proved at trial that "Apple executives hoped to ensure that its e-book business would be free from retail price competition, causing consumers throughout the country to pay higher prices for many e-books. The evidence showed that the prices of the conspiring publishers’ e-books increased by an average of 18 percent as a result of the collusive effort led by Apple."
Apple stated that it will appeal.
If Apple does pursue an appeal, its best argument may be based upon the Supreme Court's 1984 opinion in Monsanto v. Spray-Rite, 465 U.S. 752. That is, it may argue that under Monsanto, the Court should not find that Apple conspired with the book publishers to raise prices, because Apple was pursuing an independent business objective -- selling iPads.
See also, stories titled "Scott Turow Criticizes DOJ E-Books Action", "Google's Larry Page Is Excited About Tablets", and "NAF Writer Condemns Amazon and DOJ E-Books Antitrust Action" in TLJ Daily E-Mail Alert No. 2,371, April 14, 2012.
New York is home to many book publishers. See, story titled "Sen. Schumer Urges DOJ to Drop Antitrust Action Against Apple and Book Publishers" in TLJ Daily E-Mail Alert No. 2,409, July 18, 2012.
See also, the DOJ's web page with hyperlinks to pleading and other documents in this action.
This case is U.S. v. Apple, et al., U.S. District Court for the Southern District of New York, D.C. 1:12-cv-02826-DLC, Judge Denise Cote presiding.
7/10. This just released District Court Opinion and Order in U.S. v. Apple contains findings of fact and conclusions of law regarding Apple's violation of law. It does not address damages. It states that "A trial on damages will follow." Nor does it contain any injunctive remedy.
Moreover, Apple faces a separate private class action based upon the same factual allegations.
The law firm of Hagens Berman filed its original complaint [44 pages in PDF] on August 9, 2011 in the U.S. District Court (NDCal) against the same defendants alleging violation of Section 1 of the Sherman Act.
This class action is now pending before the same District Court and Judge as the DOJ and states action. See also, Consolidated Amended Class Action Complaint [86 pages in PDF], filed January 20, 2012, in the U.S. District Court (SDNY). It also alleges violation of numerous state antitrust and consumer protection statutes, as well as unjust enrichment.
Steve Berman, lead counsel for the plaintiffs, stated in a release that "Judge Cote ruled definitively that Apple was guilty of conspiring to fix prices for e-books, and we believe this ruling is binding on the consumer case, meaning we do not need to again prove Apple’s culpability in the price-fixing scheme".
He continued that "Once we receive class certification, the only issue that will remain is for a jury to assess damages, which under federal law are trebled, or tripled."
That is, Hagens Berman may assert the District Court's ruling is binding as to both actions, and that Apple and the book publishers are barred from relitigating the Sherman Act claim in the class action, under the doctrine of res judicata.
This case is Anthony Petru and Marcus Mathis v. Apple, Inc., et al., U.S. District Court for the Southern District of New York, D.C. No. 11-MD-02293-DLC, Judge Denis Cote presiding.
7/10. President Obama nominated Margaret Cummisky to be Assistant Secretary of Commerce for Legislative and Intergovernmental Affairs. She previously worked for former Sen. Daniel Inouye (D-HI). See, White House news office release.
7/9. The Senate confirmed Jennifer Dorsey to be a Judge of the U.S. District Court (DNev) by a vote of 54-41. See, Roll Call No. 170. It was a nearly straight party line vote. Every Democrat voted yes, except Sen. Mark Begich (D-AK), who did not vote. Every Republican voted no, except Sen. Susan Collins (R-ME), who voted yes, and four other Republicans who did not vote.
7/8. The Senate confirmed Greg Phillips to be a Judge of the U.S. Court of Appeals (10thCir) by a vote of 88-0. See, Roll Call No. 169.
Go to News from July 1-5, 2013.

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