Apple on trial for price rise scheme
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E-mail Shanghai Daily via agencies, June 3, 2013
Apple Inc is going to trial today over allegations by federal and state authorities that it conspired with publishers to raise the price of e-books.
The trial pits the maker of the iPad and iPhone against the US Justice Department in a case that tests how Internet retailers interact with content providers.
"This case will effectively set the rules for Internet commerce," said David Balto, a former policy director for the US Federal Trade Commission.
The department filed its case against Apple and five of the six largest US book publishers in April 2012. The lawsuit accused them of conspiring to increase e-book prices and break Amazon.com Inc's hold on pricing.
Apple is going to trial alone after the five publishers agreed to eliminate prohibitions on wholesale discounts and to pay a collective US$164 million to benefit consumers.
The five publishers were Pearson Plc's Penguin Group, News Corp's HarperCollins Publishers Inc, CBS Corp's Simon & Schuster Inc, Hachette Book Group Inc and MacMillan.
The US government is not seeking damages but instead an order blocking Apple from engaging in similar conduct. However, if Apple is found liable, it could still face damages in a separate trial by the state attorneys general and consumers pursuing class actions.
Based on a comment by the presiding judge at the final hearing before the trial, Apple may face an uphill battle.
"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," US District Judge Denise Cote, who is hearing the case without a jury, said on May 23.
While those comments suggested Apple might be smart to seek a settlement, Chief Executive Tim Cook said in an interview last Tuesday with All Things Digital that Apple was "not going to sign something that says we did something we didn't do."
Apple may be calculating that future damages claims by states and class actions make it worth going to trial, said John Lopatka, a law professor at Pennsylvania State University.
"Apple might think, 'We may lose at the trial level, but we may well convince an appellate court the trial judge mischaracterized the evidence," Lopatka said.
Neither side disputes that in 2009 publishers were concerned about low prices for e-books resulting from the dominance of Amazon.com, which launched its Kindle e-reader in 2007.
The department contends that Apple's entry into the market gave publishers a means to get together to raise prices.
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