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N.Y. judge orders Apple to modify e-book contracts

By Larry Neumeister

Associated Press

POSTED:
LAST UPDATED: 06:43 a.m. HST, Sep 06, 2013



NEW YORK » A judge today ordered Apple to modify contracts with publishers to prevent electronic book price fixing and said she will appoint an external compliance monitor to review the company's antitrust policies and training.

U.S. District Judge Denise Cote's order came nearly two months after she concluded that Apple Inc. used the popularity of its iTunes store to conspire with publishers to raise e-book prices in 2010.

Cote gave the Department of Justice less than it requested but still left it pleased.

"The court's ruling reinforces the victory the department has won for consumers," Assistant Attorney General Bill Baer said in a statement. "Consumers will continue to benefit from lower e-books prices as a result of the department's enforcement action to restore competition in this important industry."

Apple spokesman Tom Neumayr said the Cupertino, Calif., company will appeal the order.

"Apple did not conspire to fix e-book pricing," he said. "The iBookstore gave customers more choice and injected much needed innovation and competition into the market. Apple will pursue an appeal of the injunction."

At trial, Apple insisted that its entry into the e-books market widened the number of customers and was a boost for publishers and authors alike, increasing the number of books available and eliminating a monopoly of the market by Amazon.com.

But the government argued that Apple joined with publishers to illegally undermine an Amazon pricing policy that had enabled consumers to buy the most popular books for $9.99.

In her order, Cote told Apple to make changes to its contracts with publishers to ensure price fixing is eliminated. She set rules to prevent the kind of cooperation she had cited between Apple and the publishers that she said harmed Apple's retail competitors in the e-book market.

For instance, she said Apple cannot enter an agreement with a publisher it had colluded with that restricts or limits Apple's ability to reduce retail prices or e-book discounts. And she said the company cannot put language in its contracts with publishers that tie e-book prices to those set by other publishers or retailers.

She said she will appoint an external compliance monitor for a period of two years to assess Apple's internal antitrust compliance policies, procedures and training and to recommend any changes necessary to improve them. She said the U.S., states that sued Apple and Apple can try to agree on a monitor to recommend to the court.

The order will remain in place for contracts between Apple and the various publishers until they begin expiring at six-month intervals in two years.

The judge also ordered Apple not to share the status of its contract negotiations with one publisher among other publishers.






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