Apple to Appeal Its eBook Price-Fixing Case to the Supreme Court
Fortune reports that Apple will be filing an appeal to the Supreme Court. On Wednesday the gadget maker asked for a month-long extension to give it more time to file its petition for a writ of certiorari.
The filing nevertheless reads like a mini-cert petition itself, spending more time outlining Apple’s basis for seeking review than explaining the attorneys’ need for an extension of time—which was, basically, other Supreme Court assignments.
Apple’s appeal hinges on whether Judge Cote, in reaching her decision, used the proper framework of analysis and, as a result, whether she failed to adequately weigh the procompetitive aspects of Apple’s conduct—for instance, the fact that it was bringing competition to a market until then dominated by a near monopolist.
Most conduct challenged as violating the antitrust laws is tested under a “rule of reason” analysis, where the court weighs all the circumstances, including the potentially procompetitive and anticompetitive effects of whatever the defendant did.
Yesterday’s filing, if accepted, would push back the deadline for Apple’s petition to 28 October 2015. When complete, that petition will go to Justice Ruth Bader Ginsberg, who handles such requests when they’re made from the Second Circuit.
Apple is going to ask the Supreme Court to overturn a June 2015 ruling by the Second Circuit Court of Appeal. That ruling upheld a 2013 decision that found that Apple had conspired with five US publishers (S&S, HarperCollins, Hachette, Macmillan, and Penguin) to raise and fix ebook prices in early 2010.
Apple’s five conspirators settled in advance of the trial, paid fines, gave up control of their ebook prices, and accepted other restrictions (which have since expired).
Apple, on the other hand, took the case to court, lost, and then lost multiple appeals. Its last shot at winning, or at least having the decision overturned, is this appeal to the Supreme Court.
Apple is going to argue that Judge Cote should have applied the "rule of reason" in deciding whether Apple had broken the law when it engaged in the horizontal price conspiracy. Under this legal theory, an act like price-fixing can be ruled legal if it results in a more competitive market.
Apple’s deals with publishers lead to Apple entering the ebook market in early 2010. As many have pointed out, Amazon controlled something like 90% of the US ebook market at the time. Some would call that a near-monopoly, which would be true except for the lack of monopolistic behavior.
For example, ebook prices were lower before Apple entered the market, and rose as a result of that entrance as ebook retailers stopped competing on price.
That is going to make it hard to argue that there was increased competition, and the Supreme Court would also have to overlook the fact that consumers were directly harmed by the price-fixing.
The odds are stacked against Apple on this one, but to be honest this case really doesn’t matter that much – not any more.
It’s now September 2015, and the five publishers who struck deals with Apple now control their ebook prices again. They gained that control legally this time around, through negotiation with Amazon and the other ebook retailers (and so did a sixth publisher, HMH).
Everything that consumers gained when the DoJ sued Apple and the five publishers has been lost. As a result, Apple’s case has little value beyond working out the fine print in antitrust law.
The only thing that consumers stand to gain from this appeal is the $450 million fine Apple will have to pay if it loses this appeal. The money is nice, but I would much rather have competitive prices in the ebook market.
image by Apple and Pear Australia Ltd