As expected, Apple has filed an appeal in the Federal ebook price fixing case where Judge Denise Cote ruled that Apple conspired with book publishers to artificially raise prices. Apple has steadfastly maintained that it did nothing wrong, and that there never was any form of collusion with book publishers.
Apple maintains it did nothing wrong, files appeal in ebook price fixing trial
Apple, along with several of the top book publishers, was accused of conspiring to push ebook prices up by forcing retailers to use what's known as an agency model where publishers set book prices instead of selling titles at a wholesale price and letting stores set their own prices. With publishers determining how much consumers will pay for books, the reasoning went, they'd end up paying more than if retailers set prices.
Many retailers were having trouble competing against Amazon since the online retailer was routinely selling books below cost, and the idea was that switching to an agency model would put book sellers on a more even playing field. Amazon, however, resisted the change since it would push up its prices.
All of the accused publishers settled out of court to avoid legal expenses and potential fines, but Apple pushed ahead alone maintaining that it did nothing wrong and that there never was a conspiracy.
As part of her remedies, Judge Cote is placing a third party observer in Apple to monitor the company's practices and to make sure it doesn't engage in activities that violate antitrust laws. The court is also breaking the contracts Apple has with publishers that include any type of price restrictions, is stripping out "most favored nation" clauses from Apple's contracts, and is blocking Apple from striking similar deals with publishers for four years.
The restrictions effectively block Apple from competing in the ebook market since it won't have control over the prices for books it sells, and can't easily react to price changes from Amazon and other competitors. That's good news for Amazon since it can continue to sell books below cost with the implied consent from the Federal Courts.
The iPhone and iPad maker isn't going into the appeals process alone. Simon & Schuster, one of the publishers accused of conspiring with Apple, is appealing the injunction on the grounds that it puts publishers at a disadvantage. By limiting Apple's ability to negotiate contracts, publishers feel they can't effectively compete in the book market.
Apple filed its Notice of Appeal with the Second Circuit Court of Appeals at the end of last week, according to Gigaom. Formal arguments, however, won't need to be filed until some time in early 2014.