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Apple to defend against e-book price fixing charges

Warwick Ashford

Apple is set to begin its defence in a non-jury trial in New York against US government charges that it colluded with five publishers to fix the prices of e-books.

The US Department of Justice (DoJ) alleges that in 2009 Apple worked with Penguin Group, HarperCollins, Simon & Schuster, Hachette and Macmillan to raise the prices of e-books to compete against Amazon.

The suit alleges that Apple conspired with the publishers to adopt the so-called agency model in which publishers set the price of e-books directly, effectively ending Amazon’s ability to set its own prices.

Prosecutors claim this allowed Apple to take a percentage of sales made through its iBooks platform and at the same time prevented Amazon from charging lower prices.

The publishers have since all settled, agreeing to stop prohibiting wholesale discounts and to pay a cumulative $164m to benefit consumers.

However, Apple chief executive Tim Cook recently dismissed the idea of a settlement with the government, saying Apple had not done anything wrong.

The DoJ plans to use as evidence quotes attributed to the former chief executive Steve Jobs, taken from his authorised biography, according to the BBC.  

The DoJ says Jobs explained to his biographer that Apple had told publishers: "We'll go to the agency model, where you set the price and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway."

Apple's lawyers argue that any agreement with publishers did not affect their dealings with retailers such as Amazon.

The company denies entering into or facilitating a conspiracy to eliminate price competition or raise prices in the e-book industry.

The New York trial is also expected to feature testimony from high-ranking publishing executives.

The DoJ is not seeking monetary damages or a fine, but wants the judge to order Apple not to engage in conduct related to price fixing in the future, according to US reports.

However, if the judge rules against Apple, it could face a separate trial by state attorneys general and consumers pursuing class actions and seeking monetary damages.

Apple last year settled an e-book price-fixing antitrust case with the European Commission.


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