US DOJ could lose ebook price fixing lawsuit

Apr 12, 2012
11
US DOJ could lose ebook price fixing lawsuit

The US Department of Justice brought a lawsuit against Apple and ebook publishers yesterday regarding price fixing, and already three companies have settled. Hachette, HarperCollins and Simon & Schuster will have to break their current contracts with Apple and negotiate new ones. While it’s indicates an early victory for the DOJ, CNET believes that the agency won’t have the same success with Apple.

CNET spoke to several antitrust experts regarding the current case, as well as examining previous cases undertaken by the DOJ. Geoffrey Manne, a teacher of antitrust law at the Lewis and Clark Law School in Oregon, says: “It's a harder case against Apple than the publishers.” That’s the sentiment echoed by Dominick Armentano, author of Antitrust and Monopoly, who believes the DOJ “has a far better case against the publishers than Apple.”

Even the case against the publishers could see trouble, since the DOJ’s own account of events didn’t see them agreeing on specific prices, only a business model. The publishers agreed to Apple’s “agency model”, where they set the prices, while Apple takes its 30% cut. The DOJ will have to prove whether or not Apple and the publishers actively conspired on prices.

Certain legal precedents help Apple and the various publishers. For example, in a 2007 cases, LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.PSKS, INC., the court ruled that manufcaturers are allowed to enforce minimum prices. While three publishers have settled so far, Apple, Macmillan, and Penguin are all preparing for the legal battle.


Must Read Bits & Bytes