The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
Monica Patra, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur
The US supreme court declined to hear Apple’s challenge to an appellate court decision that it conspired with five publishers to increase ebook prices, meaning it will have to pay $450m as part of a settlement. The original suite dates back from 2012 when the U.S. Circuit Court of Appeals in New York ruled that Apple had conspired with publishers to inflate ebook prices as a means of undermining Amazon. The accord calls for Apple to pay $400 million to e-book consumers, $20 million to the states, and $30 million in legal fees. Consumers who overpaid will get credits they can apply to future e-book purchases, the Justice Department said in a statement.
The second circuit’s ruling followed a 2013 decision by US district judge Denise Cote after a non-jury trial that Apple played a “central role” in a conspiracy with publishers to eliminate retail price competition and raise ebook prices.
The Justice Department said the scheme caused some ebook prices to rise to $12.99 or $14.99 from the $9.99 price previously charged by market leader Amazon.com.
Publishers that the Justice Department said conspired with Apple include Lagardere SCA’s Hachette Book Group Inc, News Corp’s HarperCollins Publishers LLC, Penguin Group Inc, CBS Corp’s Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan.
Government lawyers accused Apple of leading a price-fixing effort as part of the 2010 introduction of its iPad tablet and iBookstore feature. Apple was seeking to gain a foothold in a market dominated by Amazon.com Inc., which at the time treated best-selling books as loss leaders, selling them for $9.99.
At the Supreme Court, Apple argued that its actions enhanced competition by providing consumers with a new e-book platform. The company said e-book prices have fallen in the years since the introduction of iBookstore.