Appeals Court Agrees That Apple Conspired on E-Book Pricing

A federal appeals court has upheld an earlier ruling that determined Apple conspired with publishers to raise digital book prices. The U.S. Court of Appeals for the Second Circuit voted 2-to-1 in agreement of Judge Denise Cote’s 2013 decision when the case originally played out in the U.S. District Court in Manhattan. Apple and five publishers had been accused by the Justice Department of conspiring to increase prices above Amazon’s standard for new e-books through an ‘agency pricing’ model. The publishers settled prior to the trial, but Apple opted to fight the accusation.

“When Apple entered the e-book market, it changed the way publishers sold books by introducing a model called agency pricing, in which the publisher — not the retailer — set the price, and Apple took a cut of each sale,” reports The New York Times. “The Justice Department argued that left Amazon.com, the other big e-books retailer, no choice other than to raise prices.”

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Emails between Apple’s Steve Jobs and Eddy Cue helped Judge Cote in her 2013 ruling. For example, in regards to the contracts negotiated with publishers, Jobs wrote: “I can live with this, as long as they move Amazon to the agent model too for new releases for the first year. If they don’t, I’m not sure we can be competitive.”

“We conclude that the district court’s decision that Apple orchestrated a horizontal conspiracy among the publisher defendants to raise e-book prices is amply supported and well reasoned, and that the agreement unreasonably restrained trade,” wrote the appeals court in its decision.

According to Apple spokesman Josh Rosenstock, “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.”