Apple: “Draconian” DoJ antitrust remedies are “wildly out of proportion”

Aug 2, 2013
11
Apple: “Draconian” DoJ antitrust remedies are “wildly out of proportion”

Apple has blasted Department of Justice suggestions for how it should remedy the ebook price fixing issue, describing the fixes as a "draconian and punitive intrusion" into its business. The DoJ filed a list of remedies earlier today, including forcing Apple to allow rival ebook vendors such as Amazon and Barnes & Noble to include direct links to their own ebook stores from their apps, along with employing an "external monitor" - paid with Apple's own dime - to police the Cupertino firm. Unsurprisingly, Apple believes the suggestions are "wildly out of proportion" to the anti-competition findings, which it still claims are false.

A New York court found Apple guilty last month of conspiring with publishers to force up prices for ebooks ahead of the iBookstore launch, including pressuring Amazon to adopt the so-called agency model where publishers not retailers set the sales price of titles. Apple insisted it would appeal the verdict, but will face hearings beginning August 9 to decide what remedies will be enforced.

The DoJ is taking no chances with its proposals, however, aiming for a comprehensive package of punishments and preventative measures to avoid future antitrust behavior. In addition to forcing Apple to allow third-party ebook store links, it also asked that the company's existing agreements with five major publishing houses - which each settled its antitrust case with the DoJ, rather than go to trial - be invalidated.

Future agreements negotiated over the next five years, the DoJ suggested, should not be permitted if they would have the effect of raising prices for the end-user. That would apply not only to ebooks, but to any type of multimedia sold in iTunes, including music, TV shows, and movies.

The package of remedies still has to be approved by the court - which will separately decide on what monetary damages Apple must pay, a figure which could reach as high as $500m according to some industry observers - but Apple has wasted no time in critiquing them as well as putting forward what it believes would be reasonable penalties.

For instance, Apple concedes that "reasonable limitations on Apple's ability to share information" might be appropriate, in addition to "a prohibition" on most favored nation pricing agreements with publishers. Otherwise, only "reasonable antitrust training obligations for Apple, lasting a reasonable term" would be fair, Apple argues, claiming that "no further relief can be justified under the legal standard governing antitrust injunctions or the Constitution."

Anything else, Apple insists, could be considered "overreaching" and "establish a vague
new compliance regime - applicable only to Apple - with intrusive oversight lasting for ten
years, going far beyond the legal issues in this case, injuring competition and consumers, and violating basic principles of fairness and due process."

Overall, Apple's response says, the DoJ's proposals are "a sweeping mandate" that is "disconnected from the issues, evidence, and arguments in this case, that would hurt competition rather than foster it." As for needing to pay for a new watchdog, the company already has a "special antitrust legal department" which it says it has bolstered since the court's decision.


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