Friday, July 12, 2013

Apple Found Guilty of Price-Fixing

Given that the prosecution had the words of the defendant’s guru, in which he pretty much said, “Hey, let’s do some price-fixing today!” this case clearly fits in the open-and-shut category. As far as I can see, nobody who doesn’t work in Cupertino even bothered to pretend to be surprised.
Apple Inc. broke antitrust laws and conspired with publishers to raise electronic book prices, a federal judge ruled Wednesday, citing “compelling evidence” from the words of the late Steve Jobs. [ … ] 
In her ruling, Cote said “compelling evidence of Apple’s participation in the conspiracy came from the words uttered by Steve Jobs, Apple’s founder, CEO and visionary." 
She quoted Jobs, who died in 2011, as saying he understood publishers’ concerns that Amazon’s $9.99 price for new releases was eroding the perceived value of their products and that Apple was willing to try pricing e-books at $12.99 and $14.99. She noted that Jobs bought an e-book for $14.99 at the launch of Apple’s e-book store and told a reporter that day that Amazon’s $9.99 price for the same book would be irrelevant because soon all prices will “be the same.” 
“Apple has struggled mightily to reinterpret Jobs’ statements in a way that will eliminate their bite,” Cote wrote in the 160-page opinion. “Its efforts have proven fruitless.” [ … ] 
“Through their conspiracy they forced Amazon (and other resellers) to relinquish retail pricing authority and then they raised retail e-book prices,” Cote wrote. “Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant.”
I notice that in the penalty phase, the government may ask that the court require education on antitrust for Apple execs. Sounds like a good idea.

Several weeks ago, at the start of the trial, I offered some thoughts on the possible effects of the case (anticipating Apple’s defeat) here.

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