Judge sets final restrictions for Apple on e-books

New York TimesSeptember 6, 2013 

As punishment for engaging in an e-book price-fixing conspiracy, Apple will be forced to abide by new restrictions on its agreements with publishers and be evaluated by an external “compliance officer” for two years, a federal judge has ruled.

But Denise L. Cote of U.S. District Court in Manhattan rejected some of the measures the Justice Department sought, including extensive government oversight over Apple’s App Store.

In a filing this week, Cote issued her final ruling on the penalties to be imposed on Apple after the long-running lawsuit the Justice Department filed against the technology giant in April 2012.

The government accused Apple, along with five major book publishers, of illegally colluding to raise the price of e-books and of trying to curb Amazon’s influence in the publishing industry as Apple prepared to introduce its iPad in 2010.

All five publishers, Macmillan, HarperCollins, Simon & Schuster, Hachette Book Group and Penguin Group USA, have since settled while saying they did nothing wrong. Random House, which was not named in the lawsuit, merged with Penguin earlier this year.

But Apple, confident of its innocence and with the financial resources to fight in court, went to trial this summer. It defended itself with testimony from a string of high-ranking Apple executives, including Eddy Cue, the company’s senior vice president for Internet software and services, who led the negotiations with publishers.

In July, Cote ruled against Apple in a nonjury trial, saying there was compelling evidence it had violated antitrust laws by conspiring with the publishers.

In her ruling this week, Cote said Apple may not enter into any agreement with the five settling publishers that “restricts, limits or impedes Apple’s ability to set, alter or reduce the retail price of any e-book.”

The ruling also said that Apple would be prohibited from discussing with any publisher its contractual negotiations with another publisher.

In addition, Cote ordered that Apple cooperate with an external monitor who will evaluate and report on the company’s training reforms and antitrust compliance.

Bill Baer, the assistant attorney general, said in a statement Friday that the Justice Department was pleased by the court’s ruling.

“Consumers will continue to benefit from lower e-book prices as a result of the department’s enforcement action to restore competition in this important industry,” he said. “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.”

Apple has said it will appeal the July ruling.

“Apple did not conspire to fix e-book pricing,” Tom Neumayr, an Apple spokesman, said in an email Friday. “The iBookstore gave customers more choice and injected much-needed innovation and competition into the market.”

At a hearing last week, Cote said she wished to “intrude as little as possible” on Apple’s business.

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