Apple: Conspiracy? What conspiracy?

June 29, 2014, 11:59 AM UTC

When Apple (AAPL) in June settled half the e-book price fixing case, the half representing 30 U.S. states and territories, the deal was contingent on the outcome of the other half, the one filed by the U.S. Department of Justice.

If Apple loses its federal appeal, the states collect a pile of money (the amount is under seal). If Apple wins on appeal, the states get nothing. (See The big ‘if’ in Apple’s e-book settlement.)

So where does he federal case stand?

As it happens, Apple submitted a brief on the matter last week. It was Apple’s response to the DOJ’s response to Apple’s original appeal, filed last October.

One result of all this paperwork is that the government’s statement of the case, and Apple defense, have gotten refined into some pretty tight boilerplate.

Here, in the two most recent briefs, is U.S.A. v. Apple reduced to 341 words:

The government’s side:

“In late 2009 and early 2010, Apple orchestrated and participated in a conspiracy with five major book publishers to take control of retail pricing for electronic books (ebooks) and to raise prices to agreed-upon levels. The conspiracy was successful: retail ebook prices for the vast majority of the Publisher-Defendants’ new releases and bestsellers rose from $9.99 to $12.99 or $14.99. Consumers paid almost 20% more, on average, for all of the Publisher-Defendants’ ebooks.

“After extensive evidentiary submissions, detailed pre-trial briefing, and a three-week bench trial, the district court, Honorable Denise Cote, issued an Opinion and Order with 100 pages of fact findings. The court found that Apple had conspired with the Publisher-Defendants to raise ebook retail prices and that this conspiracy was a per se unlawful horizontal price-fixing conspiracy in violation of Section 1. The court ruled in the alternative that the conspiracy was unlawful under Section 1’s rule of reason because its anticompetitive effects were without any countervailing procompetitive benefits.”

Apple’s defense:

“Plaintiffs’ theory is fundamentally at odds with the most basic principles of antitrust law. Neither plaintiffs nor the district court cite a single case that supports antitrust liability under the circumstances presented here. Plaintiffs ask the Court to condemn the negotiation of admittedly lawful agency agreements that allowed Apple to enter a nascent market dominated by a single company, open the iBooks Store, and empower thousands of new retail price-setters, leading to intensified competition, exponential growth in output, and significantly lower average prices. Plaintiffs offer Delphic pronouncements about “a larger understanding” to which Apple was a party, but they cannot even describe when the “understanding” was formed or what was agreed to, which is particularly devastating here given that the court explicitly did not find that ‘Apple itself desired higher e-book prices than those offered at Amazon.’

“Apple’s conduct cannot be deemed ‘price-fixing,’ whether ‘garden variety’ or otherwise, on any legal theory. Affirming the district court’s ruling would ‘attach antitrust liability to conduct that in reality is the competitive activity the Sherman Act seeks to protect.’ This Court should reverse.”

•  US v Apple appellees brief
•  Apple’s reply

Follow Philip Elmer-DeWitt on Twitter at @philiped. Read his Apple coverage at or subscribe via his RSS feed.