Pixel Envy

Written by Nick Heer.

Judge Rules Apple Conspired to Raise Prices on E-Books

Judge Denise Cote (PDF):

The question in this case has always been a narrow one: whether Apple participated in a price-fixing scheme in violation of this country’s antitrust laws. Apple is liable here for facilitating and encouraging the Publisher Defendants’ collective, illegal restraint of trade. Through their conspiracy they forced Amazon (and other resellers) to relinquish retail pricing authority and then they raised retail e-book prices. Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant.

Given the mountain of emails between key Apple executives and book publishers citing specific prices, this isn’t a surprise.

It doesn’t matter that Amazon had a 90% market share pre-iPad. It doesn’t matter that this enabled Google and Amazon to be on a level playing field. It doesn’t matter that Amazon’s business plan involves artificially depressing the price of e-books to at (or below) cost, reducing the ability for others to compete. It doesn’t matter that an agency model might, in the long run, be a more stable way to create competition.

The question that this trial was tackling was always whether Apple played a role in getting publishers to collaborate to assign prices. This was clearly the case, from day one. Whatever the effects of horizontal price fixing are — higher or lower prices — it’s morally, ethically, and (most important to this case) legally wrong.