A federal appeals court on Tuesday upheld a 2013 decision finding Apple Inc. liable for conspiring with publishers to raise the price of e-books. Yet considering Apple's position on the matter, they could ask the Second Circuit to rehear the case or ask the U.S. Supreme Court to review it.
Apple said in a statement that "Apple did not conspire to fix e-book pricing and this ruling does nothing to change the facts. We are disappointed the Court does not recognize the innovation and choice the iBooks Store brought for consumers. While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps."
The dissenting judge, Dennis Jacobs, agreed with Apple's arguments that it behaved legally and reasonably in setting up a new pricing structure to compete with Amazon.
Jacobs wrote in his opinion that "Apple took steps to compete with a monopolist and open the market to more entrants, generating only minor competitive restraints in the process. Its conduct was eminently reasonable; no one has suggested a viable alternative."
Jacobs added that "the trial judge who found Apple liable for price-fixing in 2013 viewed the case through the wrong legal lens. He said antitrust law couldn't hold Apple plainly responsible for a conspiracy among publishers on a different rung of the supply chain.
On the only horizontal plane that matters to Apple's e-book business, Apple was in competition and never in collusion. So it does not do to deem Apple's conduct anticompetitive just because the publishers' horizontal conspiracy was found to be illegal."
Although the swing vote by Raymond Lohier, agreed with the majority ruling to uphold Cote, he did however note in his opinion that "There is some surface appeal to Apple's argument that the e-book market, in light of Amazon's virtually uncontested dominance, needed more competition." Though in the end, the judge felt that Apple was acting like a corporate bully and ruled against them.
Assistant Attorney General Bill Baer welcomed the ruling, which he said "confirms that it is unlawful for a company to knowingly participate in a price-fixing conspiracy, whatever its specific role in the conspiracy or reason for joining it."
Lagardere SCA's Hachette Book Group, CBS Corp's Simon & Schuster Inc. and News Corp.'s HarperCollins Publishers LLC agreed to settle with the Justice Department the day it filed its complaint in 2012. Penguin and Macmillan settled with the government soon after. Together, the publishers agreed to pay about $170 million in damages to e-book buyers. News Corp. also owns The Wall Street Journal. Spokespeople for HarperCollins, Penguin Random House and Simon & Schuster declined to comment.
Apple should take their case all the way to the Supreme Court because the same legal hounds who were involved in Apple's e-Books price fixing investigation are the very ones that are now investigating Apple regarding Apple Music. Once tainted, the DOJ will try to force the case that Apple is once again in a conspiracy to win in another market: the streaming music business. The only way to beat a legal bully is to fight them at their own game.
Though in the end, it's unknown how Apple's CEO Tim Cook will play his next hand. Apple is already battling for privacy matters against the FBI and fighting it out to preserve strong encryption. In 2013 Apple's CEO vehemently defended Apple's tax strategy in a senate hearing.
So Apple isn't shy in battling it out in court or elsewhere if they feel they've done nothing illegal. So this latest court ruling may not be the end to this matter if Apple wants to take it all the way to the Supreme Court. So stay tuned, there could be another round of court battles ahead.