A panel of three judges presiding over Apple’s appeal of the Justice Department’s e-book price fixing lawsuit may end up throwing a wrench into the government’s case. According to a report by GigaOm, the court seriously considered Apple’s suggestion that its actions were justified because they helped the company compete with Amazon.
“Would it not matter that all those people got together to defeat a monopolist? It’s like the mice that got together to put a bell on a cat,” U.S. Circuit Judge Dennis Jacobs asked Deputy Solicitor General Malcolm Stewart, who represented the Justice Department.
At the time Apple introduced the iBookstore in 2010, Amazon had 90 percent of the e-book market.
The government alleges that the Cupertino-based company engaged in illegal price fixing when establishing its iBookstore. The case centers around agreements Apple made with the big five publishers in the U.S. to transition to an agency pricing model, which would allow Apple to take 30 percent of all proceeds from e-book sales made through its store.
That in and of itself wasn’t a problem, but Apple’s agreements with the publishers also included a “most-favored-nation” clause that allowed the company to replicate any discounts made on other stores, like Amazon’s Kindle store. That meant it was in the publishers’ best interests to fight for higher prices from Amazon which is known for heavily discounting e-books.
The company has consistently argued that it hasn’t done anything wrong, though that didn’t convince U.S. District Judge Denise Cote, who ruled against Apple last year and prompted this appeal.
If Apple’s arguments work, they’d jeopardize a $450 million class action settlement the company made with a group of state attorneys general in a separate but connected price fixing case.
