Apple blasts ebook price fix monitor for fee extortion

Chris Davies - Nov 29, 2013, 1:56pm CST
Apple blasts ebook price fix monitor for fee extortion

Apple is protesting against the court-appointed antitrust monitor it was forced to pay for as part of the guilty ebook price-fixing verdict, arguing that the lawyer selected is extortionate in his fees. Former US Justice Department inspector general Michael Bromwich was elected by the US District Court to track Apple’s compliance around avoiding potential antitrust behaviors, after the Cupertino firm was ruled to have colluded with publishers to drive up ebook pricing. Ironically now, however, Apple says Bromwich is himself taking advantage of missing competition to gouge with fees that amount to $1,100 per hour.

In a filing made by Apple this week, the company points out that it has been left hamstrung with the choice of monitor, given the role was filled by judge Denise Cote. “Mr. Bromwich appears to be simply taking advantage of the fact that there is no competition here or, in his view, any ability on the part of Apple, the subject of his authority, to push back on his demands” Apple wrote, Bloomberg reports.

According to Apple’s sums, in the first two weeks of work, Bromwich invoiced the Mac-maker $138,432. That number includes not only his own hourly fee, but that of a number of legal assistants brought in to support the role, and a 15-percent “administrative surcharge” on top.

Such a surcharge is “unprecedented in Apple’s experience” the outraged company pointed out, and in fact “of all known past Apple matters” no lawyer retained by the company has been more expensive.

Bromwich’s justification for that fee comes down to hats: specifically, he claims that he is acting as court-appointed monitor as a consultant through his Bromwich Group firm, not as a lawyer through is Goodwin Procter LLP legal firm. However, Apple argues that since that legal firm issued a press release back in October highlighting Bromwich’s role, the division “seems slippery at best.”

“Goodwin Procter partner Michael R. Bromwich has been appointed external antitrust compliance monitor for Apple, with responsibility for reviewing and assessing the company’s antitrust policies, procedures, and training” the press release stated. “Bromwich is also the founder and Managing Principal of The Bromwich Group, an independent consulting organization. The Bromwich Group will be responsible for the Apple monitoring assignment.”

Apple was left footing the bill for Bromwich after being found guilty earlier this year of price-fixing ebooks. In a ruling in September, the court judged that Apple would not be able to do group negotiations with publishers, instead being forced to stagger them; the Cupertino company would also have to employ a third-party monitor to track how it avoided antitrust behaviors in future, with that monitor reporting directly to the court.

However, Apple is also unhappy that Bromwich, as monitor, is apparently allowed to talk to Apple employees without counsel present, in addition to being able to report back to Justice Cote without Apple also being in the room. The Justice Department is yet to comment on the new complaint.

Apple filed an appeal over the ruling earlier this year.

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