November 23, 2014 – A US judge signed off on Apple’s US$450 million legal deal to compensate consumers harmed by an illegal price-fixing conspiracy for electronic books.
The settlement negotiated to avoid trial in the civil case brought by authorities in 33 states calls on Apple to reimburse consumers to the tune of about US$400 million and then pay legal costs and fees. The settlement was deemed by the court to be “fair, reasonable and adequate.”
In an unusual twist, the agreement is contingent on the upholding of a verdict in a July 2013 federal court ruling that Apple violated antitrust laws by orchestrating a conspiracy with five publishers to raise e-book prices. Apple is appealing the decision. If Apple’s federal conviction is overturned, no money will be paid. In the case of a retrial, Apple will pay a reduced settlement figure. Apple declined to comment for this report.
“This settlement proves that even the biggest, most powerful companies in the world must play by the same rules as everyone else,” New York state Attorney General Eric Schneiderman said in June when the agreement was reached.
The case centres on Apple’s deal with the publishers as it introduced its iPad tablet, the varied uses of which included a challenge to Amazon’s Kindle electronic book reader. The complaint, filed on behalf of consumers, accused Apple of working with five top publishers in 2009 to 2010 to set the prices of electronic books in an Apple-led effort to break into rival Amazon’s dominance of the market.
Their complaint was filed on the heels of July’s federal court verdict against the iPhone and iPad maker, finding Apple guilty of conspiracy to fix prices of e-books with the publishers. The judge in the case issued an injunction barring Apple from any similar practices and ordered the company to work with a court-appointed monitor on compliance.
Prior to Apple’s entry into e-books, the publishers – all of whom have settled in the case -complained about Amazon’s US$9.99 price for most titles. Apple and the publishers agreed on contracts that let publishers set the price of most bestsellers at US$12.99 or US$14.99, but Apple won a provision that allowed it to match the prices of Amazon or any other retailer.