After reaching settlements with just about every publisher involved in the long-running Apple/Amazon e-book price fixing case, The United States Department of Justice today published its proposal to end the case with Apple after finding the company guilty of conspiring to fix ebook prices during trial earlier this month:
“The court found that Apple’s illegal conduct deprived consumers of the benefits of e-book price competition and forced them to pay substantially higher prices,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Under the department’s proposed order, Apple’s illegal conduct will cease and Apple and its senior executives will be prevented from conspiring to thwart competition in the future.”
Among the key points in the proposal:
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-Apple must terminate its agreements with the 5 publishers involved
-Must “refrain for five years from entering new e-book distribution contracts which would restrain Apple from competing on price.”
-Must not “serve as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms”
-Must not enter contracts for music, movies, TV, or games, that will increase prices for competing retailers
-Must allow other e-book retailers like Amazon and Barnes & Noble to provide links from their e-book apps to their e-bookstores for two years (on iPhone and iPad)
-Must “appoint an external monitor to ensure that Apple’s internal antitrust compliance policies are sufficient to catch anticompetitive activities before they result in harm to consumers”
One of the most notable requests in the proposal would require Apple to allow Amazon and other book publishers to link directly to their ebook stores from within their mobile apps on iOS devices. The DOJ says it would allow “consumers who purchase and read e-books on their iPads and iPhones easily to compare Apple’s prices with those of its competitors.”
The settlement proposal comes following the DOJ’s trial against Apple last month, which resulted in the courts finding Apple guilty of conspiring with other publishers to raise e-book prices.
Apple is the last defendant in the case, as the five publishers initially involved– Hachette Book Group (USA), HarperCollins Publishers L.L.C., Holtzbrinck, Macmillan, Penguin Group (USA) Inc. and Simon & Schuster Inc–had settled with the courts previously. The publishers agreed to terminate agreements with Apple that would limit ebook price competition and “allow for retail price competition in renegotiated e-book distribution agreements.”
A report earlier this month from GigaOM estimated that Apple could have to pay up to $500 million in consumer damages based on what the five publishers have paid through state and class action cases, but there was no financial related settlements included in DOJ’s remedy proposal today. We heard that a trial against Apple for damages would soon follow the court’s ruling, and today the DOJ notes that the courts will hold a hearing on remedies on Aug. 9.