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Judge Denise Cote Approves Department of Justice Agency Pricing Settlement

5069265780_3c7be147e1_mWell, that was fast. Just two days after Bob Kohn filed his comic-book amicus curae brief, Judge Denise Cote has issued an opinion approving the settlement proposal put forward by the Department of Justice and the three settling Agency Five publishers. Cote’s 45-page opinion restates the arguments made by both sides and addresses them, and by and large comes down in favor of the arguments put forward by the DoJ and its responses to the criticisms made in the public comments and other filings. It also quotes Emily Dickenson.

Did the judge intentionally plan to release this opinion on the same day Amazon attracted so much hoopla and attention in the e-book field with its new product announcement? It could be strictly coincidence, but do we have to assume that it is? Regardless, there are certain to be a number of appeals, so don’t expect to see it go into effect any time soon.

The four chief categories of opposition to the settlement come down to it (1) harming third parties such as print bookstores or non-Amazon e-bookstores, (2) being overbroad and impossible to implement effectively, (3) not having a sufficient factual basis, and (4) promoting Amazon’s monopoly power.

However Cote replies that (1) The Sherman Act isn’t meant to protect other businesses from actually having to compete, it’s meant to protect consumers from all businesses when they don’t compete; (2) the settlement is as broad as it has to be to provide the remedies it needs to (and one of the more contentious clauses was actually included at the urging of the publishers, who were confident enough in their ability to enforce it to ask for it themselves); (3) the government provided all the facts it needed to under the relevant laws and precedents, and doesn’t have to meet the demands for more material that falls outside those requirements; and (4) Amazon’s opponents haven’t adequately proven that it really does have a monopoly—other competitors were already entering the market before agency pricing, and continued even after agency pricing was cast into doubt—and even if it did, two wrongs don’t make a right.

Cote also responded to Apple complaints about being punished by unexpectedly early termination of its contracts without a trial by saying that, no, Apple isn’t having to do a thing, it’s the publishers who are the ones who have to terminate their contracts—and besides, it had far more advance warning that this termination was coming than it was even asking for given that the original filings took place months ago. And Cote dismissed Apple’s request that the implementation of the settlement be postponed until after the trial, because the publishers who did elect to settle deserve to reap the benefits of that decision right away rather than be dragged through a costly discovery process.

One thing that interested me was that, as part of point (4) above, Cote actually devoted over two pages to discussing and rebutting the arguments of Bob Kohn in detail—drawn from his public comment, rather than his comic book amicus curae, which she didn’t mention at all (other than that he had filed one). Submitting the comic book doesn’t seem to have done Kohn any harm, and he doesn’t exactly seem to have suffered from being limited to just five pages since the judge drew his arguments from what she called “one of the more detailed” of the comments.

I can’t say I’d expected to see this so soon, but I’m not really surprised by how the judge ruled. The Department of Justice isn’t exactly staffed by rank amateurs, and it stands to reason they’d have a pretty clear understanding of how the law works. They laid out their arguments so cogently, and gave such short shrift to any complaints that fell outside the scope of what was required by law and precedent, it seems rather reasonable that the judge approved it. Ruling within established law and not rocking the boat is usually what lower-court judges do. It’s left to the appellate courts to examine special circumstances and additional arguments and make new laws.

It will be interesting to see if the higher courts find some of those arguments more convincing.

Photo by geetarchurchy.

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fjtorres September 6, 2012 um 9:10 pm

One point the Judge made was that the claims about Amazon’s "predatory pricing" are totally bogus because Amazon ebooks sales were made at a profit. If others can’t compete with Amazon that is their hard luck because Amazon is breaking no law; merely being way more efficient.
She also said that the flood of astroturf comments provided all the information she needed to assess all the issues without need for hearings.
In other words, the opponents of the settlement greased the way for her to approve it this fast. 🙂

fjtorres September 6, 2012 um 9:13 pm

“It is not necessary to hold an evidentiary hearing before approving the decree. Given the voluminous submissions from the public and the non-settling parties, which describe and debate the nature of the alleged collusion and the wisdom and likely impact of settlement terms in great detail, as well as the detailed factual allegations in the Complaint, the Court is well-equipped to rule on these matters. A hearing would serve only to delay the proceedings unnecessarily.”

Peter September 6, 2012 um 10:06 pm

The timing is not a coincidence at all- the decision was actually filed yesterday (it went public today)

Amazon scheduled the Kindle event around the date of the decision so they could finalize pricing.

I’d love to see Bob Kohn appeal on the grounds that 45 pages is too long and that the judge needs to draw a cartoon.

Apple & 4 Publishers Offer a Settlement to Resolve Price-Fixing Investigation in the EU – The Digital Reader June 5, 2014 um 1:00 pm

[…] The European Commission announced this morning that they have received a settlement offer from 5 of the conspirators involved in the Price Fix 6. Apple, S&S, Macmillan (von Holtzbrinck), HarperCollins, and Hachette have all signed on with a set of term which would basically mirror the US settlement. […]

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