Department of Justice Fires Back at Apple, Penguin, Macmillan, B&N in New Legal Filing
The Department of Justice has filed a 17-page response to the motions for summary judgment filed lately by various parties in the agency pricing anti-trust case, and for those who are enjoying following the game of legal ping-pong, the DoJ has made a great return back over the net.
In the filing, the DoJ responds to arguments raised by Apple, Penguin, Macmillan, and the combination of Barnes & Noble and the American Booksellers Association. A number of the responses have to do with how various cases the parties cited don’t mean what they think they do, but there’s still plenty of stuff that won’t make ordinary readers’ eyes glaze over to go around.
The DoJ starts out by addressing the argument made in common by many who opposed the settlement that e-books are different and anti-trust laws shouldn’t apply to them. Funny thing, says the DoJ, but quite a few other businesses have tried the same “the rules shouldn’t apply to us” argument, including “[r]ailroads, publishers, lawyers, construction engineers, health care providers, and oil companies”. And time and again, the courts have shot these arguments down.
Suggestions that the antitrust laws are of no use when it comes to e-books are especially remarkable in light of the unmistakable consumer harm that resulted from the conspiracy in this case. The conspirators eliminated the “wretched $9.99 price” that so attracted the reading public and so infuriated publishers, Compl. (Docket No. 1) ¶ 32, and made sure that Apple would not have to contend with what it viewed as senseless competition as it entered the e-book market. Now those conspirators that have not settled with the United States seek to upset the settlements that have been reached, and thereby delay the restoration of competition. Those efforts have no basis in law, and this Court should reject them.
In response to Apple’s objection that it’s being punished without its own trial yet, the DoJ says that no existing legal theory allows Apple to be a dog in the manger and prevent everyone else from benefiting from the settlement—especially since Apple’s own contracts with publishers allowed immediate termination by any party on 30 days’ notice—not too different from the 7 days’ notice required by the settlement. (Certainly not different enough that Apple has protested on those grounds.) Apple’s complaint that the settlement changes who has the responsibility for pricing is “bewildering” because it’s actually giving Apple the ability to set its own price that it did not have before—though, of course, the thing that’s really bothering Apple is that everyone else will get to do it, too.
As for Penguin, the DoJ effectively accuses it of trying to mislead with statistics by pointing the court at commenters who incorrectly assumed prices had gone down based on limited information—while Penguin’s own prices had risen by an average of 17% in the four weeks after Penguin implemented agency pricing. It also says that, under existing case law, it is under no obligation to produce any economic analyses in support of its assertion.
The DoJ also rejects Macmillan’s assertion that the settlement will give Amazon back control over the entire e-book market, noting continued heavy competition by other companies—and pointing out that even if Macmillan was right, blunting competition is not the purpose of anti-trust law—rather, it’s “to protect the public from the failure of the market.”
Apparently the only new argument offered by Barnes & Noble and the ABA was the idea that the overwhelming volume of comments opposing the settlement should demonstrate it is not in the public interest. (Even I think that’s kind of a silly assertion, as much as some of those opposed attempted to stack the ballot box with form letters.) The DoJ points out that most of those comments didn’t come from entities who wanted to serve the public interest, but rather from those who stood to benefit by the continuation of agency pricing.
This is all very exciting. I wonder who the judge is going to find most convincing? Will the settlement go through?
I also wonder what the Department of Justice would have to say to the filings from Bob Kohn, assuming the judge permits them. Given what they wrote about him in the original response to comments, it would almost certainly be amusing.