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Apple

The big ‘if’ in Apple’s e-book settlement

By
Philip Elmer-DeWitt
Philip Elmer-DeWitt
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By
Philip Elmer-DeWitt
Philip Elmer-DeWitt
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June 17, 2014, 7:36 AM ET
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U.S.A. v. Apple, the e-book antitrust suit that Apple (AAPL) lost so spectacularly last year, is back in the news.

Apple has struck a deal with 30 states attorneys general who had demanded hundreds of millions of dollars in damages on behalf of book buyers in the their states. By settling, the two sides avoided a jury trial that was set to begin next month.

But there’s a big “if” in the letter the parties submitted to U.S. District Judge Denise Cote Monday — along with a sealed document that outlined the terms of the deal.

No money will change hands until Apple’s appeals of Judge Cote’s controversial ruling — which it has said it will take to the Supreme Court, if necessary — are exhausted.

Judge Cote last year ruled that Apple had illegally conspired with five book publishers to raise the price of e-books. To many observers — not just Apple’s lawyers — the ruling seemed to turn U.S. antitrust law on its head. Apple in 2010 was trying to break into a market over which Amazon (AMZN) exercised monopoly control.

The states attorneys general had hitched their class-action suit to the outcome of the federal case, and in February they announced that they were seeking $280 million in damages. If Apple’s antitrust violation were found to be willful, the damages could have been tripled to $840 million — 0.5% of the $158.8 billion in cash Apple had on hand at the end of 2013.

The dollar amount Apple settled on with the states is still under seal. But the letter that was made public acknowledges that Apple is still appealing the original antitrust finding. As part of the deal, the states have agreed that, as the letter puts it, “any payment to be made by Apple under the settlement agreement will be contingent on the outcome of that appeal.”

The text of the letter.

See also: The Apple e-book trial: The view from the hard benches. 

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