Apple Hit with Permanent Injunction in Ebook Price Fixing Case

Judge Denise Cote followed through on her plan to hobble Apple's position in the ebook market on Friday by imposing a permanent injunction on the company that limits it's ability to negotiate contracts with publishers and tosses out some of the provisions in the contracts the iPhone and iPad maker has already signed.

Apple hit with injunction in ebook price fixing caseApple hit with injunction in ebook price fixing case

The ruling comes as part of the Department of Justice case accusing Apple and several publishers of conspiring to artificially raise book prices. While the publishers all settled out of court to avoid a lengthy and expensive trial process, Apple pushed ahead alone maintaining that it did nothing wrong and that there never was a conspiracy.

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, is breaking any 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 competitors like Amazon. Since Amazon can continue to sell books below cost, the Department of Justice and the Federal Courts are essentially giving control over the book market to online retailer.

Judge Cote said in her ruling that she isn't restricting Apple's ability to compete and that her ruling doesn't do anything that "prohibits Apple from entering into or maintaining an agreement with an ebook publisher merely specifying prices that Apple must pay for the ebook publisher's ebooks."

Apple still maintains that it did nothing wrong. In a statement to The Verge, Apple said,

Apple did not conspire to fix ebook pricing. The iBookstore gave customers more choice and injected much needed innovation and competition into the market. Apple will pursue an appeal of the injunction.

The injunction isn't the end of the story for Apple. The company has already said that it plans to appeal the ruling and injunction, so there's a good chance the case will continue to be a big part of Apple's world for at least the next couple of years.