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Apple Reaches Settlement on eBook Antitrust Lawsuit

110619784_190162d261_o[1]According to a new court document filed on Monday, Apple has reached a settlement in the antitrust lawsuits brought by state attorneys general and consumers over ebook price fixing.

The terms of the settlement have not been disclosed, but we do know that the damages trial has been indefinitely postponed.

According to the letter which plaintiff’s attorney Steve Berman wrote to Judge Denise Cote, "The parties write to inform the Court that the Class Plaintiffs, State Plaintiffs, and Apple have executed a binding agreement in principle to resolve the Class litigation, and the damages phase of the States’ litigation.” The judge signed an order agreeing the plaintiffs in the case will have until July 16 to file the proposed settlement terms.

This comes as a surprise.

Having settled a similar case in Europe, Apple has been doing everything in their power to fight the allegation that they conspired with 5 US publishers in early 2010 to raise ebook prices and force Amazon to adopt retail price maintenance. While the 5 publishers settled in advance of the trial, Apple defended themselves in court in June 2013 and lost.

Since then they have been fighting a rear guard action with motions, appeals, and even going over Judge Cote’s head with a couple appeals to the 2nd Circuit Court. Apple is still working on an appeal to get the entire case thrown out, but they had exhausted all of their options for delaying the damages phase of the ebook antitrust lawsuit.

The plaintiffs were said to be seeking up to $840 million in damages, but at this point we don’t know just how much they are getting from Apple.  But however much Apple agreed to pay, it will probably amount to less than a percent of its cash reserves. That makes the financial penalties less than a slap on the wrist, which might explain why Apple finally settled.


image by mando2003us

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Chris Meadows June 17, 2014 um 1:04 pm

I expect Apple was less concerned about the monetary outcome than all the additional bad publicity the jury trial would haul out. This might also be why they were so eager for Judge Cote to issue a summary judgment. So this way they get to bypass all that and go straight to the appeal.

Alas, for all that schadenfreude that will now no longer be possible…

Mike June 17, 2014 um 2:12 pm

From the NYT/Reuters, "Judge Cote found that Apple took part in a price-fixing conspiracy to fight online retailer Inc’s dominance in the e-book market.

Apple is appealing that decision and Monday’s settlement is contingent on the outcome of that appeal."

So don’t cash your checks yet. And now with the matter soon to be settled, time for Apple to give Amazon an offer it can’t refuse or perhaps a lift down the proverbial Cross Bronx Expressway. I don’t think Apple will conclude that it isn’t worth it to get revenge with Amazon planning to come out with a phone.

Nate Hoffelder June 17, 2014 um 2:26 pm

I didn’t count the checks, but I think it is safe to do so. Apple has already struck out twice with the 2nd Court of Appeals, so it is safe to assume that Apple will strike out a third time.

That court turned down Apple’s requests to delay the antitrust lawsuit until after Apple filed their appeal. That is a sign that the Appeals Court doesn’t think Apple has a shot at getting the case overturned.

fjtorres June 17, 2014 um 3:01 pm

And they don’t.
Appeals courts rarely if ever review the lower court’s findings of fact and the only way Apple wins on appeal is if you ignore well documented facts.
They settled because the class action suit relies on the exact same facts as the DOJ case so once their motion for dismissal failed the only question left was the size of the damages. Settling they avoid the treble damages headed their way and might’ve whittled the actual payment down to the low 9 digits. They had no leverage beyond wasting more of the court’s time so I figure something in the $200M range. A bargain considering they cost consumers well over a billion.

Paul June 18, 2014 um 10:39 am

To play devils advocate, the deal might have cost consumers a billion, but how much cost has Amazon selling books etc.. below cost damaged consumers by putting local businesses how of business? They are many ways to slice and dice that statement.

fjtorres June 18, 2014 um 10:46 am

Yeah, that is definitely a tack the devil would take.
Smoke and brimstone and totally irrelevant to Apple and the publishers breaking the law to ripoff consumers.
Lucifer loves fallacious moral equivalencies as a way to get suckers to sign in blood.

Mike June 18, 2014 um 11:02 am

LOL the Apple haters here are so confident and yet don’t have a clue on how to read a financial statement. A +500 P/E is like living on an heroin addiction. Everyone knows the good feeling is going to come to a tragic end, probably sooner than later.
Check out the pretty graphs. The important ones (in red) are going downhill.

Nate Hoffelder June 19, 2014 um 12:44 pm

I don’t see what Amazon has to do with Apple settling this lawsuit.

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