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Supreme Court Declines to Hear Apple’s Appeal in E-Book Pricing Case


A display of iPads at an Apple event in 2015. Credit Stephen Lam/Getty Images

WASHINGTON — The Supreme Court on Monday refused to review an appeals court’s determination that Apple had conspired with book publishers to raise the prices of digital books.

As is the court’s custom, its brief order turning down the case gave no reasons.

The case arose from Apple’s 2010 entry into the e-book marketplace, which had been dominated by Amazon and its Kindle reader. Publishers frustrated with Amazon’s low prices welcomed the new retailer, its iPad device and its willingness to let them set their own prices, with Apple taking a cut of each sale.

Last year, a divided three-judge panel of the United States Court of Appeals for the Second Circuit, in New York, said the terms Apple had offered to five big publishers allowed them to engage in a price-fixing conspiracy.

In urging the Supreme Court to hear the case, Apple Inc. v. United States, No. 15-565, the company said its actions had promoted competition.

“Apple’s launch of the iBookstore as a platform for tens of millions of consumers to buy and read digital books on the iPad dramatically enhanced competition in the e-books market, benefiting authors, e-book publishers, and retail consumers,” Apple said in its petition seeking a Supreme Court review. “Following Apple’s entry, output increased, overall prices decreased and a major new retailer began to compete in a market formerly dominated by a single firm.”

“If a new firm’s entry disrupts a monopoly and creates long-term competition, that is to be lauded, whether the previous prices were artificially high or artificially low,” the brief said.

The appeals court disagreed. “Competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new e-book retailer at the expense of passing control over all e-book prices to a cartel of book publishers,” Judge Debra Ann Livingston wrote for the majority.

The case began in 2012, when the Justice Department accused Apple and five publishers of conspiring to raise e-book prices above Amazon’s standard of $ 9.99 for new titles by introducing an agency model of pricing. The five publishers settled, but Apple went to trial.

Judge Denise L. Cote of United States District Court in Manhattan, ruled for the government, finding that the publishers had joined a price-fixing conspiracy and that Apple “was a knowing and active member of that conspiracy.”

Judge Cote relied in part on the words of Steven P. Jobs, the company’s co-founder, who died in 2011.

“I can live with this, as long as they move Amazon to the agent model too for new releases,” Mr. Jobs wrote to Eddy Cue, Apple’s senior vice president for Internet software and services. “If they don’t, I’m not sure we can be competitive.”

Judge Cote said that the company had no good explanations for that and other communications. “Apple has struggled mightily to reinterpret Jobs’s statements in a way that will eliminate their bite,” she wrote. “Its efforts have proven fruitless.”


NYT > Technology

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