Apple to Pay $450 Million to Consumers After Losing E-Book Appeal

Apple orchestrated a conspiracy among publishers to raise e-book prices, a federal appeals court ruled on Tuesday. As a result, Apple must pay the $450 million (most of it to e-book consumers) as agreed with private plaintiffs and 33 states in November reports the Wall Street Journal.


“We conclude that the district court correctly decided that Apple orchestrated a conspiracy among the publishers to raise e-book prices,” wrote Second Circuit Judge Debra Ann Livingston. The conspiracy “unreasonably restrained trade” in violation of the Sherman Act, the federal antitrust law, the judge wrote.

You may recall that the whole story began with the dissatisfaction of publishers with Amazon’s pricing strategy, so they teamed up with Apple, which offered them a different model (known as the agency model), that ceded the power to set prices to publishers. That led to a hike in e-book prices.

Apple said the push against Amazon was unintentional, but the evidence apparently contradicted that, so the federal appeals court found Apple liable for price-fixing in 2013.

Apple was obviously disappointed with the ruling, but it still has the option to ask the Second Circuit to rehear the case or ask the US Supreme Court to review it.

“Apple did not conspire to fix e-book pricing and this ruling does nothing to change the facts. We are disappointed the Court does not recognize the innovation and choice the iBooks Store brought for consumers,” Apple said in a statement. “While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps,” the company continued.

Apple’s e-book business is being watched closely a court-appointed monitor, Michael Bromwich, part of US District Judge Denise Cote’s effort to prevent Apple further violating antitrust laws.

Steve W. Berman, managing partner of Hagens Berman and lead attorney representing the consumer class said: “Class counsel took risk in agreeing to a settlement in which Apple paid $50 million if they won the appeal or $450 million if they lost. We took that risk because we believed that the evidence and the law supported our view that Apple’s conduct clearly violated the Sherman Act. The decision today agrees with our view, shared by one of the most respected district court jurists and appellate circuit courts in the United States.”

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