US Appeals Court Upholds Apple eBook Settlement

24677513999_d9fa16a630_hA federal appeals court on Wednesday upheld Apple's $450 million settlement of claims that it harmed consumers by conspiring with five publishers to raise ebook prices.

The 2nd US Circuit Court of Appeals in Manhattan rejected a challenge by ebooks purchaser John Bradley to the fairness, reasonableness and adequacy of Apple's class-action antitrust settlement with consumers and 33 state attorneys general.

US District Judge Denise Cote in Manhattan had approved the settlement in November 2014.

Apple agreed to the accord after Cote in July 2013 found it liable for having played a "central role" in a conspiracy with the publishers to eliminate retail price competition and undercut market leader Amazon.com Inc's dominance.

The conspiracy caused some ebook prices to rise to $12.99 or $14.99 from Amazon's $9.99 price, according to the US Department of Justice.

Cote ruled after a non-jury trial, and the 2nd Circuit later upheld her liability finding. Apple has appealed that finding to the US Supreme Court, saying it could harm competition and the economy.

The Supreme Court is expected to decide in its current term whether to hear the Cupertino-based company's appeal.

Under the settlement, Apple would pay $400 million to compensate consumers plus $50 million for legal fees if the liability finding is upheld.

But if a retrial is ordered, Apple would pay just $50 million in compensation plus $20 million in legal fees. If the liability finding is overturned, Apple would pay nothing.

In Wednesday's decision, the 2nd Circuit said Cote did not abuse her powers or act prematurely in approving the settlement. It pointed to expert testimony that the accord, combined with $166 million of settlements with publishers, could actually award consumers more money than they claimed to have lost.

The 2nd Circuit also cited Cote's observation that Bradley's arguments were made by a "professional objector," meaning a lawyer who hopes to win a fee for resolving "stock objections" to class-action settlements.

Bradley's lawyer did not immediately respond to requests for comment. A spokeswoman for Apple declined to comment.

The five publishers are Hachette, HarperCollins, Penguin, Simon & Schuster Inc, and Macmillan. The case is In re: Electronic Books Antitrust Litigation, 2nd U.S. Circuit Court of Appeals, No. 14-4649.

(Reporting by Jonathan Stempel in New York; Additional reporting by Lawrence Hurley; Editing by Chizu Nomiyama, Will Dunham and Leslie Adler)

image by cchana

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