Federal Court Decision on eBooks Spares Apple (NASDAQ:AAPL) the Worst
NEW YORK – The decision by a federal judge in the e-book price-fixing case spared Apple (NASDAQ:AAPL) the worst. While the judge accepted many of the Government’s restrictions on Apple’s business practices, he rejected a proposal that would have hemmed in Apply in the future.
The order, in effect, stops Apple forcing book publishers to enter into a deal that would give Apple preferential pricing from e-books. It also prevents Apple from sharing information from negotiations with one publish with another publisher, a move designed to prevent the collusion Apple was found guilty of this summer. Also, Apple must amend any contracts with publishers that operate on an agency model – where Apple would get a commission for each sale. The judge also ordered that auditors would keep an eye on Apple’s practices to ensure they conform to the decision.
In its case against Apple, the Government accused the company and five major publishers of colluding to raise the price of e-books and of trying to suppress Amazon’s (NASDAQ:AMZN) influence on the publishing industry. All of the publishers have since settled admitting they did nothing wrong.
After the decision, Assistant Attorney General of the Department Of Justice’s (DOJ) Antitrust Division said that ‘by appointing an external monitor to ensure future compliance with the antitrust laws, the court has helped protect consumers from further misconduct by Apple. The court’s ruling reinforces the victory the department has won for consumers.’
However, one suggestion was missing from the final ruling, mainly a ban on Apple entering into deals the creators of ‘music, movies, television shows or other content; that might result in higher prices. If the court had accepted the DOJs broad request, Apple iTunes service would have been changed forever.
According to antitrust lawyer Ankur Kapoor, the DOJs request ‘could conceivably include any agreement, any deal that through whatever chain of events increases pricing in the particular industry.’ However, it’s clear that the judge did not accept this interpretation and has spared Apple, for now. While the company will be subject to increased oversight, they did not receive the most severe punishment.