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Apple guilty of e-book price fixing

Apple has posted flat profit for 1Q14, year on year

Apple has been found guilty of colluding with book publishers and conspiring to raise e-book prices in the US. The US District Court for the Southern District of New York found that Apple violated Section 1 of the Sherman Act; federal statute to limit cartels and monopolies.

According to the US Department of Justice, Apple aimed to usurp online retailer Amazon’s dominance of the e-books market as well as limit e-book retailers’ freedom to compete on price.

“This result is a victory for millions of consumers who choose to read books electronically,” said Assistant Attorney General Bill Baer. “After carefully weighing the evidence, the court agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster – to raise e-book prices.

“Through today’s court decision and previous settlements with five major publishers, consumers are again benefitting from retail price competition and paying less for their e-books.”

Baer added that as Justice Department’s litigation team established at trial, Apple executives had hoped to ensure its e-book business would be free from retail price competition and that the firm would be able to cause consumers throughout the country to pay higher prices for-books.  The evidence showed that the prices of the conspiring publishers’ e-books increased by an average of 18 per cent as a result of the collusive effort led by Apple.

“Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so. This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions.”

Apple is permitted to appeal the decision.

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