Apple was found guilty last year of colluding with publishers to raise ebook prices, but now that the antitrust case is being heard by the Second U.S. Court of Appeals, two out of the three appellate judges are starting to see things Apple’s way.
The appeals case kicked off this morning with Deputy Solicitor General Malcolm Stewart attempting to compare Apple to a driver taking a narcotics dealer to a drug pick up. The analogy was supposed to make the point that if Apple knew publishers were conspiring to fix ebook prices, it was just as guilty as them for facilitating the conspiracy. However, Fortune reports that Judge Denis Jacobs laughed off the analogy, pointing out that drug trafficking is one of the few “industries in which the law does not look with favor or new entrants.”
The comment drew a chorus of laughs in the courtroom, but Judge Jacob’s concerns went even further, as the the judge questioned whether the government should have even brought the case to court.
“Judges Jacobs and Lohier seemed quite concerned that Judge Cote had used the wrong standard, but Jacobs’s qualms clearly went much further—seeming to question the government’s judgment in ever having brought the case. His problem was that Apple was a new entrant that was bringing competition to a market that had been, until then, dominated by a “monopolist,” Amazon.
Apple lost its eBook price fixing case last year and proposed to pay $400 million to consumers as part of the settlement. Depending on how the appeals court rules though, Apple’s settlement fee could be significantly reduced.
Judge Jacobs repeatedly pointed to Amazon as the true monopolist in the ebook industry, and referred to the company’s e-book $9.99 pricing policy as “predatory pricing” that’s obviously used as a means of maintaining its monopoly dominance.
The key legal question being evaluated by the court is whether Apple’s pricing should be viewed as inherently illegal, or if Judge Cote should have judged the case under a more demanding ‘rule of reason’ analysis that would have required a more thorough investigation of all the circumstances (like Amazon’s pricing) to find out if the collusion was pro-competitive or anticompetitive.
The judges heard 80-minutes of testimony today before reserving their decision which could take up to six months to be released. Should the three appellate judges vacate the liability finding against Apple and send it back to Judge Cote, Apple will only be on the hook to pay $50 million to consumers and $20 million to attorneys. With how well things are going though, the court could just overturn the case outright, leaving Apple to pay zero dollars for the ebook pricing controversy.
Via: Fortune
Buster Hein is a freelance writer who lives in Phoenix, Arizona. Twitter: @bst3r.
5 responses to “Judge suggests Amazon, not Apple, is e-book monopolist”
Finally, some clear thinking and common sense. The appeals court just might undo this unprecedented travesty of antitrust case law where the DoJ came to the rescue and restored a monopoly that had been breached by the entry of a new competitor.
“The key legal question being evaluated by the court is whether Apple’s pricing should be viewed as inherently illegal, or if Judge Cote should have judged the case under a more demanding ‘rule of reason’ analysis that would have required a more thorough investigation of all the circumstances (like Amazon’s pricing) to find out if the collusion was pro-competitive or anticompetitive.” Bingo.
Collusion is unarguably bad if it occurred in a market setting that was otherwise competitive. But when the DoJ brings a case of collusion against firms who are battling a monopolist, where is the competitive market that they are safeguarding? A more thoughtful DoJ would have used prosecutorial discretion to wait and see a couple of years and then file lawsuits if the market outcome is clearly noncompetitive.
And when Bezos went crying to the DoJ about Apple and the publishers taking away their cake, the DoJ should have replied “Really, you want us to stop them and restore your monopoly? Are you doing stand-up now?”
That’s pie in Cote’s face
Exactly … The result of this effort by the DoJ is purely protection of an existing monopoly in the guise of consumer protection. Even if that was not the intention in bringing the suit. All the while Amazon reaps the financial reward while the DoJ carries their water for them … free of charge …
Exactly – If Apple wins, I am sure those who bailed on them will reap the benefits as well, but as an Author – I hope Apple wins this one.
The DOJ should actually look at some of the restrictions Amazon puts on us. For example If I want to put one of my books on sale on Amazon, I cannot do so unless I completely remove the book for sale on all other sites.
The sales I get on Amazon, in no way make up for the loss of all the sales on other sites but Amazon wins and I don’t.
It’s almost as if the lower court did no investigation at all when considering the facts. I have an idea. Try asking the people affected who “they” think is the monopolist and see what you get.
Eric Holder’s USDOJ basically took money from Amazon to screw Apple.