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From Antitrust Law Daily, March 7, 2016

High Court rejects Apple’s petition in e-books case

By Jeffrey May, J.D.

A finding that Apple Inc. orchestrated a price fixing conspiracy with five major e-book publishers will not be disturbed by the U.S. Supreme Court. Today, the High Court denied Apple's petition for review of a decision of the U.S. Court of Appeals in New York City, upholding a trial court's finding against Apple in an action brought by the U.S. Department of Justice and state attorneys general. The appellate court also upheld injunctive relief against Apple. In addition, the Supreme Court's denial of review confirms that Apple will pay $400 million in damages to consumers, plus a total of $50 million in attorney fees and costs to the private plaintiffs and to the states that brought suit as parens patriae over the e-books price fixing conspiracy (Apple Inc. v. U.S., Dkt. 15-565).

In its petition, Apple had asked the Supreme Court to articulate the appropriate standard for analyzing vertical agreements that facilitate horizontal collusion. Apple questioned the application of per se scrutiny to its agreements with the publishers in the e-book market after the company launched its iPad and iBookstore in 2010. The company suggested that rule of reason analysis was appropriate because the vertical agreements with e-book publishers “included commonplace provisions that are often procompetitive and unquestionably served Apple's legitimate business objectives in offering consumers a new e-books platform.”

The Department of Justice Antitrust Division and 33 state attorneys general brought the action in 2012 against Apple and five publishers for conspiring to fix the sales prices of e-books. The publishers settled the federal and state charges and signed consent decrees. A bench trial against Apple followed, and the company was found liable for violating the antitrust laws.

Damages actions brought by the attorneys general and the e-book purchaser class were resolved by settlements with the publishers and Apple. Under the terms of the settlement agreement with Apple, the company agreed to pay a total of $400 million in compensation for consumers who purchased e-books between roughly April 2010 and May 2012; a total of $20 million to the plaintiff states to cover their fees and costs; and a total of $30 million to cover the fees and costs of settlement class counsel. The full payments would be made only if the liability finding against Apple in a federal/state enforcement action was upheld. Now that the Supreme Court has denied the petition for certiorari, the class is entitled to the full amount of the settlement.

Antitrust Division reaction. “Apple’s liability for knowingly conspiring with book publishers to raise the prices of e-books is settled once and for all,” said William Baer, Assistant Attorney General in charge of the Antitrust Division, in a statement responding to the Supreme Court's denial of the petition. “And consumers will be made whole. The outstanding work of the Department of Justice team–working with our steadfast state attorney general partners–exposed this cynical misconduct by Apple and its book publisher co-conspirators and ensured that justice was done.”

Attorneys: Seth P. Waxman (Wilmer Cutler Pickering Hale and Dorr LLP) for Apple Inc. Scott A. Keller, Texas Solicitor General, for State of Texas. Donald B. Verrilli Jr., U.S. Solicitor General, for U.S. Department of Justice.

Companies: Apple Inc.

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