The United States government and Apple are set to face off this Monday in a federal court in Manhattan over allegations that Apple conspired with book publishers to make consumers pay more for electronic books. U.S. District Judge Denise Cote will be the one hearing the case.
This trial stems from the Justice Department antitrust lawsuit filed last year which accused Apple of meeting with book publishers in 2009 to come up with the price fixing scheme. This happened before the launching of the iPad. The scheme was planned to force Amazon to raise the prices of their popular e-book titles which was set at $9.99. This cost tens of millions of dollars to consumers who paid an additional of $2 to $5 for the price of each e-book.
While the lawsuit was filed against Apple and 5 of the 6 largest book publishers in the United States only Apple is going to trial. This is because the five publishers agreed to get rid of prohibitions on wholesale discounts and to pay $164 million which will benefit consumers. The five publishers involved are Pearson Plc’s Penguin Group, News Corp’s HarperCollins Publishers Inc, CBS Corp’s Simon & Schuster Inc, Hachette Book Group Inc and MacMillan.
The government wrote in its court papers that “Apple wanted to sell e-books to the public, but did not want to compete against the low prices Amazon was setting. Apple knew that the major publishers also disliked Amazon’s low prices and saw Apple’s potential entry as a pathway to higher retail prices industrywide.”
During the final hearing before the trial Judge Cote hinted that apple may be facing an uphill battle. Cote said in a statement made in May 23 that “I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that”
Timothy D. Cook, Apple’s chief executive, commented during a recent business conference that “The e-book case to me is bizarre. We’ve done nothing wrong there, and so we’re taking a very principled position of this. We were asked to sign something that says we did do something, and we’re not going to sign something that says we did something we didn’t do. And so we’re going to fight.”
The United States government is not seeking any damages but instead just an order prohibiting Apple from engaging in similar conduct. If the company is found liable in this case then they could still face damages in a separate class action suit from consumers.