In a decision that could reshape how books are sold on the Internet, a federal judge ruled that Apple conspired to raise the retail prices of e-books in violation of antitrust law, and called for a trial on damages.
Reuters is reporting today that the decision by U.S. District Judge Denise Cote in Manhattan is a victory for the U.S. government and various states, which the judge said are entitled to injunctive relief.
Apple had been accused of colluding with five publishers to boost e-book prices beginning in late 2009, as the Silicon Valley giant was preparing to launch its popular iPad tablet.
The U.S. Department of Justice said this conspiracy was designed to undercut online retailer Amazon.com Inc's dominance of the fast-growing e-books market.
Cote said the conspiracy resulted in prices for some e-books rising to $12.99 or $14.99, when Amazon had sold for $9.99.
"The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy," Cote said.
"Without Apple's orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010," she added.
The writing was on the wall last year when the European Union regulators ended an antitrust probe into e-book prices by accepting an offer by Apple and four publishers to ease price restrictions on Amazon.
In June Apple stated that "an adverse ruling would have a 'chilling effect' on how businesses investigate new markets." We'll have to see how that pans out.
The Wall Street Journal's report pointed to two emails by Apple's late CEO Steve Jobs that seemed to be damning:
"In emails introduced as evidence, Mr. Jobs seemed to gloat after published reports in January 2010 that Macmillan and Amazon were separately clashing over pricing following the Apple deal.
"Wow, we have really lit a fuse on a powder keg," Mr. Jobs wrote in an email from Jan. 30, 2010. And then in a group email at Apple the very next day, Mr. Jobs stated that "We have definitely helped stir things up in the publishing world." Yes, perhaps a little too much.
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