Apple on trial for allegedly conspiring on e-book prices

Apple goes to trial today over allegations by US federal and state authorities that it conspired with publishers to raise the price of e-books.

The trial pits the maker of the popular iPad and iPhone against the US Justice Department in a case that tests how internet retailers interact with content providers.

“This case will effectively set the rules for internet commerce,” said David Balto, a former policy director for the US Federal Trade Commission.

The Justice Department filed its case against Apple and five of the six largest US book publishers in April of last year. The lawsuit accused them of conspiring to increase e-book prices and break online seller Amazon’s hold on pricing.

Apple is going to trial alone after the other five publishers (Penguin, Harper Collins, Simon & Schuster, MacMillan and Hachette) agreed to eliminate prohibitions on wholesale discounts and to pay a collective $164 million to benefit consumers.

The US government is not seeking damages, but instead an order blocking Apple from engaging in similar conduct.

However, if Apple is found liable, it could still face damages in a separate trial by the state attorneys general and consumers pursuing class actions.

Based on a comment by the presiding judge at the final hearing before the trial, Apple may face an uphill battle.

“I believe that the government will be able to show, at trial, direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books,” US District Judge Denise Cote, who is hearing the case without a jury, said last month.

While those comments suggested Apple might be smart to seek a settlement, the company’s chief executive, Tim Cook, said in an interview last week, that Apple was “not going to sign something that says we did something we didn’t do”.

Apple may be calculating that future damages claims by states and class actions make it worth going to trial, said John Lopatka, a law professor at Pennsylvania State University.

Reuters