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Apple DOJ e-book collusion trial set for June 3, 2013

updated 01:16 am EDT, Tue June 26, 2012

Date a compromise between Apple, DOJ requested dates

Judge Denise Cote of the United States District Court for the Southern District of New York has set the e-book antitrust bench trial, which pits the Department of Justice against Apple and two of the five major book publishers, to June 3, 2013. The date is much later than Apple wanted, but much earlier than the Department of Justice wanted. Apple was hoping to get the trial underway as soon as possible, citing a cloud over the industry and damage to its reputation. The DOJ had pushed for a much later start date, claiming that Federal investigators needed until March 2013 just to gather evidence, and that Apple was rushing the case.

Department of Justice officials argue that Apple's deal with the publishers is keeping e-book prices artificially high, echoed by consumer groups. Only Apple, Macmillan, and Penguin remain in the Department of Justice suit, as the other named defendants (Harper-Collins, Simon & Schuster, and Hachette) have settled. The three remaining parties claim no wrongdoing in the case. Terms of the ex-defendant's settlements will be finalized before the end of the summer, but revolves around each of them giving up the "agency model" of e-book pricing.

The agency model allows publishers to set prices, rather than a single party controlling the market pricing, such as Amazon. Apple and MacMillan's stance is that the agency model isn't price fixing, but allows publishers and authors more flexibility in pricing. Amazon's Kindle model, sometimes called the "wholesale" model, allows books to be sold at prices of a dominant seller's choosing, often at a loss. For now, Amazon continues to pay royalties at established rates based on the book's "cover" price, but publishers wary of Amazon's past behavior towards recalcitrant publishers, have the long-term view that they will be forced to accept payouts on what the book sold for, which they have no control over.

Apple considers the suit "fundamentally flawed" and argues that the suit will harm consumers and return the e-book monopoly to Amazon. Apple has pointed out in the past that Amazon has had to cease "predatory pricing" and still has 60 percent of the nascent market, forcing it to complete more fairly than its previous 90 percent marketshare.

The original alleged conspiratorial group, Apple, Hachette, Harper-Collins, Macmillan, The Penguin Group, and Simon & Schuster, are still facing a class-action civil suit filed on behalf of e-book customers, regardless of settlements with the DOJ and involved states. Judge Cote refused to block the civil suit (seen below), saying that Apple assisted the publishers in avoiding an open market and "helped the suppliers to collude, rather than compete independently."




Judge Cote's Refusal to Dismiss Unmarked)



By Electronista Staff
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Comments

  1. TheGreatButcher

    Mac Enthusiast

    Joined: Jun 2000

    +3

    Does DOJ even have a case?

    DOJ needs nine more months to gather evidence? If you're going to file suit, shouldn't you already have enough evidence to make a case?

  1. ericdano

    Fresh-Faced Recruit

    Joined: Nov 2002

    +1

    comment title

    Funny, this "agency model" is what every other industry seems to use. So why does Apple and others get accused of price fixing. Amazon is holding the monopoly card here, and Apple and the others are trying to make it so there is a fair playing field. If anything, they are making it more competitive.

    It's sad that the "Justice Department" is wasting it's time with this. I'd rather hear about this arms thing they are using the Presidential "executive privilege" to hide. Supposed price fixing of eBooks? I don't think Eric Holder has a clue what an eBook is.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -2

    @ericdano

    Funny, this "agency model" is what every other industry seems to use. So why does Apple and others get accused of price fixing.

    Um, because they all jumped on board together with a single model, as opposed to working out separate agreements, with stipulations such as things like "no one can have a cheaper price than Apple".

    Amazon is holding the monopoly card here, and Apple and the others are trying to make it so there is a fair playing field. If anything, they are making it more competitive.

    Gee, and amazing how when Apple has the monopoly card everyone is on their side, such as defending Apple over the pricing of music on the iTMS. Somehow Apple's stance was correct. But now that Apple has completely flipped on that stance when it comes to books (which I'm sure you all will tell me how books are SOOOOO much different), now it's Apple doing the good work and Amazon being evil, trying to keep prices of eBooks down.

    It's sad that the "Justice Department" is wasting it's time with this. I'd rather hear about this arms thing they are using the Presidential "executive privilege" to hide. Supposed price fixing of eBooks? I don't think Eric Holder has a clue what an eBook is.

    Yes, the DOJ should just drop any and all investigations, they obviously can only focus on one thing at a time. And since everyone knows Apple would never do wrong, it's just a waste of time.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -1

    and..

    Apple considers the suit "fundamentally flawed" and argues that the suit will harm consumers and return the e-book monopoly to Amazon.

    Yes, harm consumers. I guess those higher prices for eBooks are a good thing, right Apple! Oh, right, it's about fair. Um, to consumers, yeah!

    Apple has pointed out in the past that Amazon has had to cease "predatory pricing" and still has 60 percent of the nascent market, forcing it to complete more fairly than its previous 90 percent marketshare.

    Yeah, and is that how you compete? Fairly? I'm sure there's no unfairness in your history with content and competitors.

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