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From Antitrust Law Daily, August 12, 2013

Apple's request for stay in e-book proceeding denied

By Jeffrey May, J.D.

The federal district court in New York City on Friday denied a request from Apple Inc. to temporarily stay proceedings in the federal and state antitrust action over e-book pricing as the court begins to consider appropriate remedies for the company's antitrust violations (U.S. v. Apple, Inc., Case No. 12 Civ. 2826 (DLC)).

Apple's request for a stay pending an appeal came on August 2—the same day that the Justice Department and 33 states and territories filed a proposed injunction remedy. In July, the court found Apple liable for facilitating and executing a conspiracy among publishers to fix retail prices for electronic books, or e-books. The issue of damages will be considered at a later date, probably in early 2014.

Apple sought the stay, arguing that there was a substantial possibility of success on appeal. Among the issues cited by Apple as grounds for appeal was the trial court's admission and exclusion of certain evidence. In an August 5 order, the court instructed Apple to identify by August 8 the evidence the company believed was “improperly admitted, excluded, or disregarded.” With the denial of the stay request, it appears that the court was not swayed by Apple's response.

In April 2012, the Department of Justice Antitrust Division and the state attorneys general brought actions against Apple and leading publishers for conspiring to fix the sales prices of e-books. The suits named as defendants Apple and publishers Hachette Book Group (USA), HarperCollins Publishers L.L.C., Simon & Schuster Inc., Holtzbrinck Publishers LLC, which does business as Macmillan, and Penguin Group (USA).

The case went to trial against Apple only, as all five of the publishers settled the federal and state charges. The bench trial lasted for nearly three weeks. The court concluded that Apple, as it prepared for the 2010 launch of its new iPad tablet device and its iBookstore, undertook to orchestrate the price fixing conspiracy to force market leader Amazon Inc. to relinquish retail pricing authority and to raise e-book prices. According to the court, the conduct did in fact raise e-book prices. In the current phase of the litigation, the court is attempting to determine the appropriate remedy for the anticompetitive conduct.

Companies: Hachette Book Group Inc.; HarperCollins Publishers L.L.C.; Simon & Schuster Inc.; Penguin Group (USA) Inc.; Holtzbrinck Publishers, LLC; Apple Inc.

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