Apple found guilty of conspiring to raise e-book prices

Posted by Trent Nouveau

Apple has been found guilty of conspiring with publishers to raise the price of e-books. The decision was reached by U.S. District Judge Denise Cote in Manhattan, with damages levied against Apple to follow in a separate trial.

"The question in this case has always been a narrow one: whether Apple participated in a price-fixing scheme in violation of this country's antitrust laws," Cote wrote in a statement obtained by AppleInsider.

"Apple is liable here for facilitating and encouraging the Publisher Defendants' collective, illegal restraint of trade. Through their conspiracy they forced Amazon (and other resellers) to relinquish pricing authority and they raised retail e-book prices. Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant."

Cote also emphasized that her ruling would not stifle competition in the e-book market, as her ruling is based on events that occurred as Apple entered the e-book market.

"[I do not] seek to paint with a broader brush," she added.

Closing arguments were presented in the trial last month, on June 20. In its case, the government accused Apple of colluding with five major book publishers to falsely inflate the prices of e-books sold on the iBookstore.

Unsurprisingly, Apple has denied the charges, even after all five book publishers clinched out-of-court settlements with the government. As AppleInsider notes, Cupertino originally led the charge in convincing publishers to switch to a so-called "agency" pricing model. 

"That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform," the publication explained.  

"In contrast, the e-book industry prior to the launch of the first iPad was under the 'wholesale model' preferred by market leader Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so."