DOJ Accuses Apple of Being "Ringmaster" in E-Books Price-Fixing Scheme

In a pre-trial brief in anticipation of a trial scheduled to begin June 3 before Judge Cote, the Department of Justice described Apple as the "ringmaster" of a conspiracy to attempt to fix prices of e-Books. 

From a factual perspective, Apple rests its defense on claims that (1) it had no idea that Publisher Defendants collectively planned to raise consumer e-book prices, and (2) it took no actions to help Publisher Defendants move as a group to do so. But those claims are belied by the overwhelming factual record. Apple’s own e-mails and admissions, coupled with those of Publisher Defendants and the phone records and testimony produced in this case, provide vivid details of both Publisher Defendants’ agreement and Apple’s knowing participation in their illicit scheme to raise consumer e-book prices and restrain retail price competition. Unfortunately for the e-book consumers of America, Apple and Publisher Defendants were successful in achieving their goals.

Apple, in its own pre-trial brief, filed earlier but also made available publicly yesterday, had argued that the government lacked any evidence that it conspired to fix e-book prices, and instead that it was always acting in furtherance of its own legitimate business goals.

A finding of liability against Apple under section 1 would represent an unprecedented expansion of the antitrust laws to condemn unilateral and procompetitive conduct. No case in the history of the antitrust laws has imposed liability on (1) a new entrant; (2) facing a dominant player with a 90% market share; (3) that entered into separate, vertical agreements; (4) motivated by legitimate and independent business objectives; (5) enabling entry into a market for an emerging technology; (6) where average prices fell and output continued to grow following entry. Ruling against Apple would create a dangerous precedent and risk deterring new entry into concentrated markets and punishing innovation. The antitrust laws should promote competition, not condemn it.

For more, see this New York Times article on the filings.