Apple eBook price fixing case going to court

[holymadness]

The critical part of the ruling, in my opinion:

If Apple is suggesting that Amazon was engaging in illegal, monopolistic practices, and that Apple’s combination with the Publisher Defendants to deprive a monopolist of some of its market power is pro-competitive and healthy for our economy, it is wrong.

This trial has not been the occasion to decide whether Amazon’s choice to sell NYT Bestsellers or other New Releases as loss leaders was an unfair trade practice or in any other way a violation of law.

If it was, however, the remedy for illegal conduct is a complaint lodged with the proper law enforcement offices or a civil suit or both. Another company’s alleged violation of antitrust laws is not an excuse for engaging in your own violations of law. Nor is suspicion that that may be occurring a defense to the claims litigated at this trial.

Someone else wrote this about the trial, but not being a lawyer or an American I'm having some difficulty parsing it. Can anyone help?

Apple is pressing this because they are playing the odds.

Since the late 90's, most per-se rules that existed for the antitrust act (vertical resale price maintenance, etc) have been converted back to rule of reason analysis by the Supreme Court.

The only one so far that has not is "horizontal price fixing", which is what Apple is accused of.

They are playing the odds that if they appeal it up the chain far enough, SCOTUS will take it and declare horizontal price fixing not per-se illegal.

Apple knows that Amazon's conduct will not save them from a per-se illegal ruling like what just happened, it would only possibly save them under the rule of reason. This argument (and that part of the decision) is really directed at getting the supreme court (or at least the appeals court) to decide on the merits if SCOTUS declares horizontal price fixing to be not per-se illegal, rather than have to go through a trial again, etc.

Essentially, apple has nothing to lose by pressing except a little bad press, and much to gain.

[Graham]

Originally Posted by leebase

You know as well as I do, that had the decision gone in Apple's favor -- not a single person here would have changed their opinion.

Absolute nonsense. I've been firmly on the DOJ's side here, but if the judge had ruled in Apple's favour I would have read through the 160 page reasoning and revised my opinions accordingly.

Graham

[Elfwreck]

Originally Posted by leebase

Nothing is going to change my mind due to the ruling, and I'd just be repeating all the points I and others have made all along.

2. Agency pricing is legal.
3. Publishers setting the prices instead of Amazon does not equate to "price fixing".

These are both true. However, competitors--which publishers are--cooperating to create higher prices for consumers, is illegal. It's not the agency pricing that was criminal, but the agreement among 5 competitors and their retail outlet for the purpose of pushing higher prices on consumers.

If any one of the publishers had switched to agency pricing alone, sold books to Apple with it, and refused to sell books to Amazon without it (and probably gotten dropped from Amazon), that would not have been a crime. Had that been a successful business tactic for that publisher, enough that others decided to imitate it, that, too, would be legal.

Deciding to all change their business models at once, with the *intended, publicly-stated purpose* of getting customers to pay $13-$15 for most ebooks, instead of the $10 they were enjoying because of Amazon's discount policies, was illegal.

You can't compare this to selling gas or milk or bread. It's just books, and no one need buy a book.

Whether a product is a necessity or not has nothing to do with whether it's okay to break the law to sell it. Any publisher that didn't like Amazon's sales tactics had an easy solution: Stop selling through Amazon.

4. Agency pricing brought more competition to the market, not less.

Whether a criminal act, or the fallout from a criminal act, is overall good for the marketplace--highly debatable; there were more ebook stores in business before agency pricing then there are now--doesn't matter. It's like saying "blowing up the town hall created a booming industry in construction."

Just as a side thought, since Amazon has so many nasty business practices (not arguing with that at all), how many publishers have removed their books from Amazon as a result of this increased competition?

5. The result of this loss by Apple and the publishers will not result in $9.99 ebooks....rather it will result in ebooks being time windowed.

1. Irrelevant. The DoJ doesn't make its decisions based on probable market reaction.
2. Windowed ebooks quickly become bootlegged ebooks. Publishers know this; that's why they didn't just stop selling ebooks for the first few months after releasing a new bestseller.

[fjtorres]

Originally Posted by tubemonkey

It's like God being sued and losing

Not. Impossible.
Most of the high-power lawyers belong to the other side.


(Okay, I stole that one.)

Spoiler:

One Day the Devil challenged the Lord to a baseball game.

Smiling the Lord proclaimed, "You don't have a chance, I have Babe Ruth, Mickey Mantle, and all the greatest players up here".

"Yes", snickered the devil, "but I have all the umpires."

http://www.baseball-almanac.com/humor3.shtml

[Synamon]

Nothing is going to change my mind due to the ruling, and I'd just be repeating all the points I and others have made all along.

Thanks for the acknowledgement. No point engaging you further, but for the record I'll say that most of what you listed in your post had nothing at all to do with whether or not Apple illegally colluded to fix prices. Carry on grinding your axe.

[fjtorres]

Originally Posted by Elfwreck

Deciding to all change their business models at once, with the *intended, publicly-stated purpose* of getting customers to pay $13-$15 for most ebooks, instead of the $10 they were enjoying because of Amazon's discount policies, was illegal.

The $10 they were *sometimes* enjoying.
The apologists like to pretend Amazon sold *every* book for $10.
Those of us who were actually buying ebooks before the conspiracy know that to be a total fabrication.

The other thing to keep in mind is that not only were they stupid enough to break the law over a trivial issue, they were even bigger fools to fully document their intent. With that paper trail, appeal can go straight to SCOTUS and get laughed out in ten minutes. (Five if any of the Justices own Kindles. )

[pwalker8]

Originally Posted by fjtorres

The $10 they were *sometimes* enjoying.
The apologists like to pretend Amazon sold *every* book for $10.
Those of us who were actually buying ebooks before the conspiracy know that to be a total fabrication.

The other thing to keep in mind is that not only were they stupid enough to break the law over a trivial issue, they were even bigger fools to fully document their intent. With that paper trail, appeal can go straight to SCOTUS and get laughed out in ten minutes. (Five if any of the Justices own Kindles. )

Hum, I would say that the fact that the judge said before the trial and before seeing Apple's side of the case that she was sure that Apple was guilty will come into play in the appeal. If a juror said that, the finding would be overturned in a heart beat. In this particular case, the judge was both the judge and jury.

I was really expecting a ruling to take much longer. Kind of odd that the judge thought it was a slam dunk while many observers at the trial thought that it was a slam dunk in the opposite direction. We shall see what happens.

[kennyc]

It's not actually odd at all. There is a reason those people were wrong in their opinion. There is a reason the ruling came back quickly - the evidence was overwhelming.

and yes we will see, won't we.

[Graham]

Originally Posted by pwalker8

Hum, I would say that the fact that the judge said before the trial and before seeing Apple's side of the case that she was sure that Apple was guilty will come into play in the appeal.

No, it won't. And she had seen Apple's side of the case in the slides presented before the trial. Giving her draft opinion was standard practice and requested by both Apple and the DOJ. Judge Cote specifically addresses this in her ruling, on p6 (my emphasis):

As the parties were informed, the Court prepared a draft opinion in advance of the bench trial based on the witness affidavits and other documents submitted with the pretrial order and the arguments of counsel in their trial memoranda. At trial, the affiants swore to the truth of the contents of their affidavits and were tendered for cross and redirect examination, and the other trial evidence was formally received. The parties understood that the Court’s final findings of fact and conclusions of law would incorporate all of this evidence. Consistent with these procedures, and with the expectation that the Court had already prepared a draft opinion, the parties jointly asked the Court for its preliminary views on the merits at the final pretrial conference held on May 23, 2013.

Graham

[bgalbrecht]

Originally Posted by pwalker8

I was really expecting a ruling to take much longer. Kind of odd that the judge thought it was a slam dunk while many observers at the trial thought that it was a slam dunk in the opposite direction. We shall see what happens.

Unlike a typical juror, the judge had access to all the the pretrial briefs and discovery information, and had read it all before making her comments. And Graham explained it all better above.

[SteveEisenberg]

Originally Posted by Synamon

It's possible Apple didn't want to set a precedent by settling, but will take their slap on the wrist willingly now.

Apple says they will appeal, despite the judge having ordered the parties into settlement discussions.

Question: What happens first, the appeals process, or the penalty phase. Or are they simultaneous?

[pata]

From Arstechnica — How Apple led an e-book price conspiracy

Random House, the largest publisher, resisted Apple's call to adopt the agency model in 2010. But the company capitulated a year later in order to get its books on the iPad.

"Apple decided to pressure Random House to join the iBookstore," Cote wrote. "As Cue wrote to Apple CEO Tim Cook, 'When we get Random House, it will be over for everyone.' Apple had its opportunity in the Fall of 2010, when Random House submitted some e-book apps to Apple’s App Store. Cue advised Random House that Apple was only interested in doing 'an overall deal' with Random House. By December, they had begun negotiations, and Random House executed an agency agreement with Apple in mid-January 2011. In an e-mail to [Steve] Jobs, Cue attributed Random House’s capitulation in part to 'the fact that I prevented an app from Random House from going live in the app store this week.'"

that's evil

[frahse]

I hope that Apple pays heavily for their misdeeds.

Likewise the conspiring Publishers.

[fjtorres]

Originally Posted by pata

From Arstechnica — How Apple led an e-book price conspiracy

Random House, the largest publisher, resisted Apple's call to adopt the agency model in 2010. But the company capitulated a year later in order to get its books on the iPad.

"Apple decided to pressure Random House to join the iBookstore," Cote wrote. "As Cue wrote to Apple CEO Tim Cook, 'When we get Random House, it will be over for everyone.' Apple had its opportunity in the Fall of 2010, when Random House submitted some e-book apps to Apple’s App Store. Cue advised Random House that Apple was only interested in doing 'an overall deal' with Random House. By December, they had begun negotiations, and Random House executed an agency agreement with Apple in mid-January 2011. In an e-mail to [Steve] Jobs, Cue attributed Random House’s capitulation in part to 'the fact that I prevented an app from Random House from going live in the app store this week.'"

that's evil

It is also a *further* antitrust violation unto itself that may come into play in the penalty phase.

[fjtorres]

From Cnet:
http://news.cnet.com/8301-13579_3-57...edia-industry/

The district court ruling Wednesday means lawsuits by various states and consumers likely can proceed more quickly, and the plaintiffs won't have to prove Apple's guilt a second time, said Steve Berman, managing partner at Hagens Berman and the lead counsel in a proposed class action lawsuit against Apple.
"Once we receive class certification, the only issue that will remain is for a jury to assess damages, which under federal law are trebled, or tripled," he said

"Justice. No waiting."

Also:

http://news.cnet.com/8301-13579_3-57...-admit-defeat/

Given the detail Cote produced chronicling how Apple colluded with five big publishers on e-book pricing, even Clarence Darrow would be at a disadvantage getting this verdict overturned. The publishers, who examined the same evidence, settled with the government before the case went to trial. Not Apple, which maintained all along that it was just trying to do the right thing by customers.
If this case does wind up getting reheard, Apple will make that same pitch. But any appeals court still will have to accept the facts submitted into evidence. And they paint an unflattering picture. According to Cote:

Some consumers had to pay more for e-books; others bought a cheaper e-book rather than the one they preferred to purchase; and it can be assumed that still others deferred a purchase altogether rather than pay the higher price. Now that the [publishers] were in control of pricing, they were also less willing to authorize retailers to give consumers the benefit of promotions

.

I wonder if Judge Cote has been lurking around here.