Apple Found Guilty Of E-Book Price Fixing

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Following a lengthy trial, U.S. District Judge Denise Cote has today ruled that Apple conspired to raise the price of e-books. Another trial for damages will follow at a later date, Reuters reports.

“The decision by U.S. District Judge Denise Cote in Manhattan is a victory for the U.S. government and various states, which the judge said are entitled to injunctive relief,” the Reuters report reads.

Several publishers have already settled with the government since the price-fixing allegations began last year, but Apple refused to give in, which is why the Cupertino company was taken to court.

The Department of Justice claimed that Apple and six major publishers conspired to raise e-book prices with titles sold through the iBookstore. Its problem was with a clause in the contracts between Apple and the publishers, which stated they could not sell books on other stores, such as Amazon’s Kindle Store, at lower prices.

This clause allowed Apple to gain a share of the competitive e-books market, and helped publishers avoid the unprofitable $9.99 price point that Amazon was pushing.

“The Plaintiffs have shown that the Publisher Defendants conspired with each other to eliminate retail price competition in order to raise e-book prices,” Judge Cole wrote in her ruling, “and that Apple played a central role in facilitating and executing that conspiracy. Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the Spring of 2010.”

Judge Cole says Apple teamed up with the publishers to cut Amazon’s lead in the e-books market. And it worked.

“Apple seized the moment and brilliantly played its hand,” she wrote. “Through the vehicle of the Apple agency agreements, the prices in the nascent e-book industry shifted upward, in some cases 50 percent or more for an individual title.”

  • Robert X

    Yup, that clause is the killer. Can’t do that.

  • Gregory Wright

    By not settling I wonder if Apple thought it was protecting the legacy of Steve Jobs since this deal was worked out during Steve’s tenure.

About the author

Killian BellKillian Bell is a staff writer based in the U.K. He has an interest in all things tech and also covers Android over at CultofAndroid.com. You can follow him on Twitter via @killianbell.

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