Apple faces costs for e-book deals

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Patricia Hurtado and Christie Smythe Manhattan

Apple faces as much as $840 million (R9.3 billion) in state and consumer antitrust claims related to e-book deals with publishers that led to a US lawsuit and court-ordered monitor.

State attorneys-general and consumers who sued the world’s most valuable technology company over its e-book pricing were seeking $280m in damages and wanted that amount tripled, a lawyer for them said in a filing on Friday with the federal judge in Manhattan who presided over the US case against Apple.

The plaintiffs say they are entitled to triple damages under antitrust law because the US had already “conclusively proven” at a trial last year that Apple orchestrated a conspiracy to fix prices. The amount sought is 0.5 percent of the $158.8bn in cash that the company reported that it had as of the end of last year.

Sales of e-books, music, movies, software and services were $12.9bn in 2012, 8.2 percent of Apple’s total revenue. Apple introduced e-books in 2010 to boost the appeal of the iPad tablet as a reading device.

US district judge Denise Cote found in July after a non-jury trial that Apple orchestrated a scheme with publishers to fix the prices of e-books. Cote also found Apple liable to 33 states that joined the US Justice Department in its suit. The Justice Department did not ask for money damages in its case.

Cote said she would hold a trial this year on the damages sought by the states. While almost all the documents filed by the states and Apple have been redacted or filed under seal, the plaintiffs said in a memo “the conspiracy caused widespread antitrust injury to e-book consumers” that an expert set at at least $280m.

Kristin Huguet, a spokeswoman for Apple, declined to comment on the filing.

The US sued Apple and five publishers in April 2012, claiming Apple pushed publishers to sign deals letting it sell digital copies of their books under what is known as the agency model. Under that model, publishers set prices for each book, with Apple getting 30 percent. Apple was the last defendant left in the case after the publishers avoided trial by settling.

Cote said “the publisher defendants conspired with each other to eliminate retail price competition… and Apple played a central role”.

Cote found that because of the conspiracy, “the prices in the nascent e-book industry shifted upward, in some cases 50 percent or more on an individual title.”

Apple is appealing the trial judgment. – Bloomberg

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