Maryland News Desk

Apple busted for price fixing, fined $450M

Apple busted for price fixing, fined $450M

A federal appeal court Tuesday upheld a ruling charging Apple of illegally conspiring to inflate e-book prices to consumers, despite a vigorous legal battle from the company. The appeal is a win for the Justice Department which accused the gadget maker in 2012 of orchestrating an abusive e-book pricing policy with book publishers. Many of the associated publishers settled the case, but Apple dug in with an appeal. Apple has claimed the U.S. took too much liberty with antitrust rules to punish it. The company has waged a three-year and costly legal campaign to try to beat the charges.

But the Second U.S. Circuit Court of Appeals sided with the Justice Department. “We conclude the district court correctly decided that Apple orchestrated a conspiracy among the publishers to raise ebook prices,” according to the appeals court’s 2013 decision. The judgment, unless contested further, means Apple has been ordered to pay $450 million as a fine – most of it going to e-book buyers who were allegedly harmed by the company’s movements. That’s certainly a drop in the bucket for the smartphone maker, which reported $193.9 billion in cash and investments at the end of the second quarter.

The timing of the unfavorable appeal ruling for Apple is a bit embarrassing for the company. The appeal loss is being handed down the very same day Apple’s new music service is launched, which has already attracted negative publicity from the financial terms offered to musicians. The company remains resolute in its innocence. “Apple did not conspire to fix ebook pricing and this ruling does nothing to change the facts. We are disappointed the Court does not recognize the innovation and choice the iBooks Store brought for consumers. While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps,” the company said in a statement. The company would not give any more details on whether it plans to pursue various options to appeal the decision.

The case is considered a landmark in the fast-emerging intersection of art and technology. As more content heads online, big questions loom over what the artists’ are entitled to receive and how much power the gatekeepers to digital content may have. Ankur Kapoor, antitrust attorney and partner at Constantine Cannon LLP in New York City, says: “The Court of Appeals’ opinion, that Apple joined the publishers’ horizontal conspiracy, is largely based on circumstantial evidence. … But under antitrust law, like any other, a trial court’s judgment may stand on circumstantial evidence.” Shares of Apple are up $1.07, or 0.9%, to $125.60 Tuesday.

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