Judge Cote Assigns DOJ Monitor in Apple Ebook Price Fixing Case

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Judge Denise Cote has assigned former Assistant US Attorney and Justice Department Inspector General Michael Bromwich with the task of monitoring Apple as part of the five-year injunction she hit the Mac, iPhone, and iPad maker with in an ebook price fixing case. Mr. Bromwich will watch over Apple's business practices for two years, but that could be extended to five.

Apple now has a DOJ monitor to oversee its business dealsApple now has a DOJ monitor to oversee its business deals

Apple and several of the top book publishers were accused of conspiring to artificially raise book prices up by forcing retailers into a model where the publishers set book prices instead of letting stores sell titles at whatever prices they choose. Changing from a wholesale model to an agency model meant that Amazon would have to stop selling books below cost, which was driving competition out of the market.

Instead of seeing Amazon as artificially lowering the price, the DOJ felt that Apple and publishers were artificially raising prices and filed a lawsuit alleging they conspired to push book prices up. 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.

Judge Cote ultimately ruled that Apple had colluded with publishers and as part of her  her remedies placed Mr. Bromwich in the company as a third party observer to monitor business 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.

Mr. Bromwich has previous experience as a monitor since he served on a team watching the oil industry, and was a monitor more than ten years ago with the Metropolitan Police Department in the District of Columbia, according to CNET.

Apple is appealing the ruling, but Judge Cote has chosen to move forward with her remedies during that process. Formal arguments in the appeal will come in early 2014.

[Some image elements courtesy Shutterstock]

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Apple could overturn Judge Cote's ruling on appeal, but that's still months off at best. Until then, Amazon gets to control the book market and Apple has a new babysitter.

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This whole case was stupid and obviously a ploy on Amazon’s behalf to cut real competition off at the knees… I just wonder where the DOJ was when Amazon and the record labels got together and started offering DRM free music during a time when Apple was still forced to attach DRM to the music they sold?

The really funny thing is, Apple is now allowed to offer books at the same price Amazon does, and maybe even cheaper as the DOJ just legalized undercutting as fair market tactic.

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