Apple Injunction Issued Over e-Book Price Fixing
Kristen M. Foster
Weeks of litigation ended this week when the Department of Justice issued Apple Inc. an injunction in the e-books antitrust case. The injunction will last for five-years, starting in early October. It is accompanied by an External Compliance Monitor; the candidate can be one suggested by Apple.
The filing was released Friday, and DOJ achieved a lot of what it had intended with the ruling. Apple was found liable of conspiring with publishers to fix e-book prices in the iBookstore last July by Judge Denise Cole. Apple denied the accusation, “Apple did not conspire to fix e-book pricing… The iBookstore gave customers more choice and injected much needed innovation and competition into the market,” Tom Neumayr, Apple spokesman, said in an early statement, promising that Apple would appeal. Apple may seek a stay of the injunction upon appeal.
The court can extend the injunction for one-year periods, pending its expiration. Apple faces separate trials related to damages demanded by states seeking related claims.
DOJ antitrust Assistant Attorney General Bill Baer praised the development on behalf of customers: “The court’s ruling reinforces the victory the department has won for consumers… 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.”
The decision further forbids Apple from imposing most-favored-nation clauses in their e-book publishing contracts for the term of the injunction as well as prohibiting Apple from entering into contracts with publishers that include them. Apple had hoped this requirement would only relate to those five publishing companies, all relatively silent today, who had already settled their cases—Lagardere SCA’s Hachette Book Group, Inc; News Corp’s HarperCollins Publishers LLC; Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan; Penguin Random House LLC; CBS Corp’s Simon & Schuster.
DOJ’s full intent was reportedly to change Apple’s in-app purchase policies and allow competitor e-book suppliers (think Amazon) to use the apps without giving Apple a 30% commission. Apple lucked out in this specific as Judge Cole had previously determined not to affect the App Store, stating last week that she wanted the ruling, “to rest as lightly as possible on how Apple runs its business.”
The five publishing houses who have already settled will have to stagger new contract negotiations with Apple. Retailers will be able to discount the publishers’ books for two years with other vendors. Judge Cole dictated the order in which Apple would work out new contracts, with the last to settle waiting the longest. The order is as follows: Hachette, 24 months after final judgment effective date; Harper Collins, 30 months; Simon & Schuster, 36 months; Penguin, 42 months; Macmillan, 48 months.
So readers, if you didn’t pay attention before to what publishing house your favorite authors are under, now’s the time![Images compiled from Apple, Hachette, HarperCollins, Macmillan, Penguin, Simon & Schuster.]