Apple Inc., the world’s biggest technology company, has been barred from entering into anti-competitive contracts with electronic book publishers, two months after a judge said it played a“central role” in a conspiracy to fix prices.
U.S. District Judge Denise Cote in Manhattan also will appoint a monitor to review Apple’s antitrust compliance policies, according to an order made public Fri-day that narrows many provisions sought by the U.S. government. Last week, Cote said the order would rest “as lightly as possible” on how Apple does business.
“Apple shall not enter into or maintain any agreement with an e-book publisher where such agreement likely will increase, fix, or set the price at which other e-book retailers can acquire or sell e-books,” Cote said in the order.
Cote rejected government requests that she give the monitor broader authority over Apple’s business practices, impose changes to how Apple sells e-books through electronic applications, and the ability to regulate content sold by Apple other than e-books, including digital music.
Cote said the order will expire after five years instead of the 10 years requested by the Department of Justice.
Apple plans to appeal the order, spokesman Tom Neumayr said.
“Apple did not conspire to fix e-book pricing,” Neumayr said in an email. “The iBook store gave customers more choice and injected much needed innovation and competition into the market.”
The Justice Department is pleased with the judge’s order, Assistant U.S. Attorney General Bill Baer said in an email.
“Consumers will continue to benefit from lower e-books prices as a result of the department’s enforcement action to restore competition in this important industry,” Baer said.
The Department of Justice sued Cupertino, Calif.-based Apple and five book publishers in April 2012. After a trial, which began June 3, Cote ruled July 10 that Apple violated antitrust laws in its contracts with five of the six biggest book publishers.
At trial, Apple insisted that its entry into the e-books market widened the number of customers and was a boost for publishers and authors alike, increasing the number of books available and eliminating a monopoly of the market by Amazon.com.
But the government argued that Apple joined with publishers to illegally undermine an Amazon pricing policy that had enabled consumers to buy the most popular books for $9.99.
Apple was found liable to 33 states that joined the Department of Justice in the suit and faces a separate trial on damages sought by the states. The Department of Justice didn’t ask for money damages in its case.
In her order, Cote told Apple to make changes to its contracts with publishers to ensure price fixing is eliminated. She set rules to prevent the kind of cooperation she had cited between Apple and the publishers that she said harmed Apple’s retail competitors in the e-book market.
For instance, she said Apple cannot enter an agreement with a publisher it had colluded with that restricts or limits Apple’s ability to reduce retail prices or e-book discounts. And she said the company cannot put language in its contracts with publishers that tie e-book prices to those set by other publishers or retailers.
She said she will appoint an external compliance monitor for a period of two years to assess Apple’s internal antitrust compliance policies, procedures and training and to recommend any changes necessary to improve them. She said the U.S. states that sued Apple and Apple can try to agree on a monitor to recommend to the court.
The case is U.S. v. Apple Inc., 12-cv-02826, U.S. District Court, Southern District of New York (Manhattan).
Information for this report was contributed by Bob Van Voris of Bloomberg News and Larry Neumeister of the Associated Press.
Business, Pages 31 on 09/07/2013