Yesterday, Judge Denise Cote of the U.S. District Court for the Southern District of New York, in a 56-page decision, denied Apple’s motion to dismiss the federal antitrust complaint filed against it, which alleged that Apple spearheaded a conspiracy among e-book publishers to fix e-book prices by introducing “agency pricing” where the publisher, not the seller, determines e-book prices.
Apple and the five e-book publishers named in the complaint have argued that they introduced agency pricing to increase market efficiency, and that this was not a concerted effort to push other e-book sellers (such as Amazon) out of the market.
The judge did not buy this, quoting Steve Jobs’s own statement to his biographer where he said he’d told the publishers that under agency pricing “the customer pays a little more, but that’s what you want anyway.” Judge Cote also quotes Jobs’s prediction to reporters at the iPad launch that prices for e-books will “all be the same.”
Despite the strong wording of the judge’s decision, it’s important to understand that this is in no way a ruling on the merits of the case. A motion to dismiss essentially argues that, assuming everything in the complaint is true, the defendant hasn’t broken the law. All the judge is really saying here is that if the facts are exactly as stated in the complaint, Apple has violated antitrust law. On the other hand, it looks as though Apple will have a hard time contesting the allegations on a factual basis, given Jobs’s prolific statements indicating the contrary. So far, it seems Apple has realized this and is instead choosing to claim that its actions were legal.
Simon & Schuster, Hachette, and HarperCollins have already reached settlements with the DOJ; the details of the settlements aren’t available. Hachette released a statement stressing that it admits no liability and pointing a finger back at Amazon, stating that “[t]wo years ago, Amazon effectively had a monopoly on the sale of eBooks and eReaders, and was selling products below cost in an effort to exclude competitors.”
Apple, along with Macmillan and Penguin, has declared its readiness to stand trial. The next hearing in the case is set for June 22.
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