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Apple to pay $450M to settle class action over e-book price fixing

updated 01:46 pm EDT, Wed July 16, 2014

Will solve complaints made in 33 states and territories

Apple has agreed to pay $450 million to settle a class-action lawsuit over e-book price fixing, brought against it by states and consumers, according to New York's Attorney General, Eric Schneiderman. The payment will settle allegations made in 33 states and territories, including New York. Schneiderman says that of the total amount, up to $400 million could reach consumers, depending on whether Apple wins its appeal.

A settlement was initially announced last month, but no terms were disclosed at the time. Even now, the deal must be approved by US District Judge Denise Cote. If Cote decides against it, the court will have retry liability, although the settlement terms allow for a smaller recovery of $50 million. In what could be a clever tactic, the deal is structured so that Apple would pay nothing if it's ruled in its appeal that the company didn't break antitrust laws.

The lawsuit accused Apple of conspiring with five major publishers to inflate e-book prices. At the same time as the company launched the iBookstore in 2010, the publishers switched to an agency model forcing companies like Amazon -- which was selling mainstream Kindle titles for average of $10 -- to raise their prices to at least those established by Apple. It and the publishers were initially targeted for investigation by the US government, but the publishers settled quickly, leaving Apple as the only party resisting. The company has so far failed to win in civil or government e-book rulings, but is appealing the case to get an opinion from judges other than Cote, who has made all the rulings thus far.



By Electronista Staff
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  1. jdonahoe

    Junior Member

    Joined: 07-05-06

    "The company has so far failed to win in civil or government e-book rulings."

    The first rule of kangaroo courts: you have already lost...

  1. Inkling

    Dedicated MacNNer

    Joined: 07-25-06

    The Washington state AG is one of those with their hands out. About the time this dispute started, I contacted him about a mailing that obviously targeted elderly people with memory problems and tried, in a host of ways, to look like a notification that a car dealers warranty was about to expire. Eventually, I heard back that the AG wasn't interesting in pursuing the matter. There was far less political capital to be made in helping the tottering elderly than in a scheme that got checks sent out to young voters. And for those who don't know, at a time when Amazon owned 90% of the ebook market and was attempting to destroy competitors by selling below cost, Apple was accused of 'price fixing' with a zero percent market share and absolutely not interest in making ebooks cost more on it's new iPad than on Amazon's Kindles. In addition, the judge in this case has a reputation for making her mind before the trial.

  1. chas_m

    MacNN Staff

    Joined: 08-04-01

    The deal is contingent on Apple losing their appeal, though, which could turn out to be a huge win for them if the appeals court keeps an open mind and decides that (whatever you think Apple did or didn't do, should or shouldn't have done) there's no way a vertical reseller can legally be guilty of a "horizontal" antitrust conspiracy among publishers. I wouldn't be at all surprised if the judges are forced to overturn Cote's ruling -- not because Apple is totally innocent as much as because the law was very incorrectly applied here.

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