Apple appeal calls e-book ruling a ‘radical departure’ from antitrust law

A screenshot of iBooks on the iPadApple has finally filed its much-anticipated appeal in the case brought against it by the U.S. Department of Justice, following a judgement last year that found the company guilty of violating the Sherman Antitrust Act.

The filing claims that the ruling by Judge Denise Cote of the United States District Court for the Southern District of New York is a “radical departure” from existing antitrust law, and will end up harming consumers. Apple is continuing to argue that the arrangements it made with publishers to use an agency pricing model rather than a wholesale model helped competition in the e-book market rather than hurting it.

Under a wholesale model, a company like Amazon could buy e-books from publishers at one price, choose to sell them at whatever price they saw fit, including at a loss. An agency model means that publishers can set their own prices, and a company like Apple takes a set percentage of any sale.

Apple got in hot water because of how it set up its agency deals with publishers, including “Most Favored Nation” clauses that required publishers to offer Apple the lowest price for any e-book on the market. Judge Cote argued those clauses, along with the fact that all the publishers signed similar contracts pointed to a conspiracy to fix prices.

In its brief, Apple argued its efforts with the iPad helped increase competition.

“Apple’s entry brought enhanced competition with Amazon via catalogue expansion, free e-book offerings, and improved e-reader software,” the company wrote. “Before Apple’s entry Amazon was setting 90% of prices for all brands; afterward, while Amazon continued to use the wholesale model for the bulk of its business, there were tens of thousands of new price-setters in the market. The result was that although some prices increased, others decreased, and, across the relevant market, prices on average decreased.”

Apple has had some limited success with the appeals court already. The company asked for an injunction to block Michael Bromwich, an antitrust monitor Cote appointed to ensure Apple’s compliance with her ruling, until after the company’s appeal. While the court ruled that Bromwich could stay, it did restrict his activities.

Apple is asking the court to either overturn Judge Gote’s ruling, or send the case back down to a lower court for another trial with a new judge.

Apple’s full complaint (via Ars Technica) is embedded below.

Apple Appeal by jbrodkin2000

  • thejory

    Please!