Apple asked the high court on Wednesday to review a June ruling that favored the U.S. Department of Justice, and found the company liable for engaging in a conspiracy that violated federal antitrust laws.
If upheld, the decision would also force Apple to pay consumers $450 million under a 2014 settlement with 33 state attorneys general and consumers that was contingent on the company’s civil liability being upheld.
Apple in its petition said the June decision by the 2nd U.S. Circuit Court of Appeals in New York contradicted Supreme Court precedent and would “chill innovation and risktaking.”
“The Second Circuit’s decision will harm competition and the national economy,” Apple wrote.
The Justice Department declined to comment on Thursday.
The 2nd Circuit’s ruling followed a July 2013 decision by U.S. District Judge Denise Cote after a non-jury trial that Apple played a “central role” in a conspiracy with publishers to eliminate retail price competition and raise e-book prices.
The Justice Department said the scheme caused some e-book prices to rise to $12.99 or $14.99 from the $9.99 price charged by market leader Amazon.com Inc.
Publishers that the Justice Department said conspired with Apple include Lagardere SCA’s Hachette Book Group Inc, News Corp’s HarperCollins Publishers LLC, Penguin Group Inc, CBS Corp’s Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan.
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It’s worth noting that Apple’s appeal also argues that the appeal’s court decision “threatens to subject pro-competitive vertical conduct to categorical antitrust condemnation, contrary to this Court’s repeated recognition that vertical conduct often enhances competition and its repeated decisions ‘to temper, limit, or overrule once strict prohibitions on vertical restraints.'”
As expected, Apple is arguing that Judge Cote erred in ruling Apple’s actions illegal per se under the Sherman antitrust act, rather than analyzing the conspiracy under the rule of reason. Judge Cote had raised that point in her ruling, but it was limited to a single paragraph.
Apple also points out that two of the three judge appellate court, including one of the judges that upheld the district court ruling, had concluded that Apple’s actions were legal under the rule of reason.
Apple could well be right, but even if it wins the most likely outcome is that Judge Cote will pen a 40-page ruling explaining in detail how Apple’s conduct was illegal under the rule of reason.
Should that happen we will likely be in for another two years of appeals.
(Reporting by Nate Raymond and by Nate Hoffelder)
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