U.S. DISTRICT COURT

Apple found guilty in plotto fix prices of ebooks

Judge at NY civil trial: Apple conspired with publishers to raise e-book prices in 2010

7/11/2013

NEW YORK — Apple Inc. broke antitrust laws and conspired with publishers to raise prices of electronic books significantly in spring, 2010, a federal judge ruled Wednesday, citing “compelling evidence” from the words of the late Steve Jobs.

U.S. District Judge Denise Cote said Apple knew no publisher could risk acting alone to try to eliminate Amazon.com’s $9.99 price for the most popular ebooks so it “created a mechanism and environment that enabled them to act together in a matter of weeks to eliminate all retail price competition for their ebooks.”

“Apple seized the moment and brilliantly played its hand,” Judge Cote said. She wrote that Apple’s deals with publishers caused some ebook prices to rise 50 percent or more virtually overnight. She said the evidence was “overwhelming that Apple knew of the unlawful aims of the conspiracy and joined the conspiracy with the specific intent to help it succeed.”

Judge Cote did not determine damages. She said a damages trial would follow, though none was immediately scheduled.

Her decision was not surprising, because she had urged Apple to settle before trial and said the company had only a slim chance of winning. She identified five trial witnesses as “noteworthy for their lack of credibility,” including Eddy Cue, a top Apple executive described as Mr. Jobs’ right-hand man.

Apple spokesman Tom Neumayr said the Cupertino, Calif.-based company will appeal. “Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations,” he said.

Assistant Attorney General Bill Baer called the ruling “a victory for millions of consumers who choose to read books electronically.”

Amazon declined to comment.

The government claimed Apple and the publishers agreed to a pricing policy that forced millions of consumers to pay several dollars more for most online books. In her ruling, Judge Cote said, “Compelling evidence of Apple’s participation in the conspiracy came from the words uttered by Steve Jobs, Apple’s founder, CEO, and visionary.”

She quoted Mr. Jobs, who died in 2011, as saying he understood publishers’ concerns that Amazon’s $9.99 price for new releases was eroding the perceived value of their products and that Apple was willing to try pricing ebooks at $12.99 and $14.99. She noted that on the day Apple’s online bookstore launched, Mr. Jobs told a reporter Amazon’s $9.99 price for a particular book would be irrelevant because soon all prices will “be the same.”