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You are here: Home / Business Briefing / Apple Aims E-Book Case at Top Court
Apple Seeks Supreme Court Hearing on E-Book Price-Fixing Case
Apple Seeks Supreme Court Hearing on E-Book Price-Fixing Case
By Shirley Siluk / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
SEPTEMBER
19
2015
In paperwork filed Wednesday with the U.S. Supreme Court, Apple has indicated it plans to fight lower court decisions that found it violated antitrust laws in its dealings with publishers for e-book sales on the iPad.

Before Apple launched its first iPad in early 2010, it negotiated terms with five of the six top book publishers to sell e-books in the device's new iBookstore. Those deals were found to be anti-competitive, according to a 2013 U.S. District Court ruling that was upheld in a split decision by an appeals court panel in June.

On Wednesday, attorneys for Apple filed a request with the Supreme Court for a 30-day extension -- until October 28 -- to file a petition for a writ of certiorari with the court. Such a writ, "orders a lower court to deliver its record in a case so that the higher court may review it," according to Cornell University Law School's Legal Information Institute. The U.S. Supreme Court "uses certiorari to pick most of the cases that it hears," the institute noted.

'Exceedingly Important to the U.S. Economy'

Apple's application to the Supreme Court argues that the decision handed down by U.S. District Judge Denise Cote of the Southern District of New York on September 5, 2013 "conflicts with this Court's precedent and with the decisions of other lower courts on a significant question of law."

That question applies to the Sherman Antitrust Act enacted by Congress in 1890. The act makes a distinction between "per se" antitrust violations -- that is, anti-competitive actions like horizontal price-fixing that need no further investigation into actual effects on the marketplace to determine they are illegal -- and "rule of reason" violations, which require greater consideration of whether the actions promote or harm market competition.

"This question is exceedingly important to the United States economy, as it concerns the rules that will govern disruptive entry by dynamic companies into new or stagnant markets," Apple noted in its application. "This sort of market innovation and entry often requires the very type of vertical contracting and conduct that the Second Circuit's decision would condemn as a per se Sherman Act violation."

Potential $450 Million Fine

At the time the first iPad was released, Amazon had dominated the e-book market for several years with its Kindle, which came out in 2007. Many new releases and bestsellers for Kindle were available for $9.99, which typically represented a considerable discount over the prices of hardcover books.

Ahead of the iPad's release, Apple reached agreements with five major book publishers -- Hachette Book Group, HarperCollins Publishers, Macmillan (as Holtzbrinck Publishers), Penguin Group and Simon & Schuster -- that allowed the publishers to set prices on iPad e-books as high as $19.99. Within a few months of the opening of the iBookstore, each of those publishers had raised prices on many of their e-books on Amazon as well.

In April 2012, the U.S. Department of Justice, along with 33 states and territories, filed a civil antitrust suit against Apple and the five publishers "for conspiring to end e-book retailers' freedom to compete on price by taking control of pricing from e-book retailers and substantially increasing the prices that consumers paid for e-books."

The U.S. District Court's ruling in 2013 agreed with the Justice Department, which required Apple to renegotiate its e-book terms with all five publishers. If Apple fails in its appeal to the Supreme Court, it will also have to pay $450 million in fines and fees that it agreed to in a 2014 settlement.

In its filing with the Supreme Court, Apple cites decisions by other courts in which alleged Sherman Act violations were decided by rule of reason rather than per se. That argument was rejected by both the U.S. District Court and the U.S. Court of Appeals. However, one of the three judges on the appeals court panel dissented, noting that rule of reason applied because the results of Apple's actions were "unambiguously and overwhelmingly procompetitive."

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Comment:

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Harry E. Price:
Posted: 2015-09-20 @ 10:22am PT
It is a specious and flagrant shopping of an appeal to a conservative, business-oriented court in hope of obtaining relief from the criminal fine and adjudication. It is a typical Jobs action to try to intimidate the business/industry.

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