A U.S. federal judge rules Apple Inc conspired with five major publishers to raise e-book prices.
CUPERTINO, CALIFORNIA, UNITED STATES (REUTERS) - In a sweeping rejection of Apple Inc's strategy for selling electronic bookson the Internet, a federal judge ruled on Wednesday (July 10) that the company conspired with five major publishers to raise e-book prices.
U.S. District Judge Denise Cote in Manhattan found "compelling evidence" that Apple violated federal antitrust law by playing a "central role" in a conspiracy with the publishers to eliminate retail price competition and raise e-book prices.
Wednesday's decision could expose Apple to substantial damages. It is a victory for the U.S. Department of Justice and the 33 U.S. states and territories that brought the civil antitrust case. The five publishers previously settled.
Apple was accused of conspiring to undercut Amazon.com Inc's e-book dominance, causing some e-book prices to rise to $12.99 or $14.99 from the $9.99 that the online retailer charged. Amazon once had a 90 percent market share.
"Apple chose to join forces with the publisher defendants to raise e-book prices and equipped them with the means to do so," Cote said in a 159-page decision. "Without Apple's orchestration of this conspiracy, it would not have succeeded as it did."
The decision was not a total surprise as Cote had indicated before the 2-1/2 week non-jury trial began on June 3 that Apple's defences might fail.
Cote set an August 9 hearing to discuss remedies, and plans to hold a trial on damages. She also ordered both sides "to pursue settlement discussions" under the supervision of her colleague, U.S. District Judge Kimba Wood.
Amazon now controls about 65 percent of the e-book market, while Barnes & Noble Inc has about 20 percent and Apple a single-digit percentage, according to Albert Greco, a book industry expert at Fordham University's business school.
In a statement, Apple said it would appeal Cote's decision.