Judge Says Apple Conspired to Raise Prices on E-Books

Reuters with CNBC.com
Wednesday, 10 Jul 2013 | 10:54 AM ET
The Barnes & Noble Nook, left, and the Amazon Kindle Paperwhite.
Patrick Fallon | Bloomberg | Getty Images
The Barnes & Noble Nook, left, and the Amazon Kindle Paperwhite.

In a decision that could reshape how books are sold on the Internet, a federal judge ruled that Apple conspired to raise the retail prices of e-books in violation of antitrust law, and called for a trial on damages. "We've done nothing wrong," Apple insisted later.

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

Apple had been accused of colluding with five publishers to boost e-book prices beginning in late 2009, as the Silicon Valley giant was preparing to launch its popular iPad tablet.

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Apple Says It Did Nothing Wrong
The tech giant is pushing back against a ruling it violated antitrust laws, reports CNBC's Jon Fortt.

The Justice Department said this conspiracy was designed to undercut online retailer Amazon.com's dominance of the fast-growing e-books market.

Only Apple went to trial, while the publishers—Lagardere SCA's Hachette Book Group and Macmillan, News Corp.'s HarperCollins Publishers, Pearson's Penguin Group (USA), and CBS's Simon & Schuster—settled with the U.S. government and the states.

Cote said the conspiracy resulted in prices for some e-books rising to $12.99 or $14.99, when Amazon had sold for $9.99.

"The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy," Cote said.

"Without Apple's orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010," she added.

In a statement to CNBC later, Apple said it will appeal the ruling. "Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations," it said. "When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon's monopolistic grip on the publishing industry."

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Cote issued her 159-page decision after a non-jury trial that ended on June 20.

The case is U.S. v. Apple Inc et al, U.S. District Court, Southern District of New York, No. 12-02826.

—By Reuters.

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  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

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