A digital book is displayed on an Apple Inc. iPad for a photograph in New York. (Scott Eells/Bloomberg)
Apple Inc., the world's biggest technology company, should be ordered to cancel existing agreements with five publishers after a judge's ruling that it conspired to fix prices of electronic books, the Justice Department said Friday.
The federal government and 33 states submitted the proposal in U.S. District Court in Manhattan. They called for a court-appointed antitrust compliance monitor and a requirement that Apple allow competitors to provide links from their e-book applications to their electronic bookstores.
Friday's proposal would require Apple to find a new way to do business with publishers.
"From a financial standpoint, this means nothing for Apple," John Bright, an analyst with Avondale Partners, said in an interview. "But strategically speaking it is a setback. I think Apple would now have to find different work- around solutions for pricing. They would use the same publishers but they would have to negotiate different solutions."
U.S. District Judge Denise Cote, after a nonjury trial in Manhattan, ruled July 10 against Apple. The company now faces another trial on damages. The proposal submitted today needs court approval to become effective.
"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," Bill Baer, the assistant attorney general in charge of the antitrust division, said in a statement.
"The idea behind this proposal would certainly make the e- book industry more competitive," Bright said. "By definition, increased competitiveness in an industry leads to lower prices."
The U.S. sued Apple and five of the biggest publishers in April 2012, claiming that the technology company pushed publishers to allow it to sell digital copies of their books under a model that raised prices and harmed consumers.
Under that so-called agency model, publishers, not retailers, set book prices, with Apple getting 30 percent.
The publishers ? Verlagsgruppe Georg von Holtzbrinck's Macmillan unit, CBS's Simon & Schuster, Lagardere's Hachette Book Group, Pearson's Penguin unit and News Corp.'s HarperCollins ? settled with the government. Continued...
Under the Justice Department plan, the salary and expenses of the proposed external monitor would be paid by Apple. The person would work with an internal antitrust compliance officer who would be hired by and report to the outside directors on Apple's audit committee.
The government's proposal extends to media other than electronic books. It would prohibit Apple from entering agreements with suppliers of music, movies, TV shows and other content if those deals are likely to increase the prices at which their competitors sell them.
Tom Neumayr, a spokesman for Cupertino, Calif.-based Apple, declined to comment on the proposal.
A hearing on the proposal will be held Aug. 9.
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Source: http://www.theoaklandpress.com/articles/2013/08/03/news/c514cfa6-bd89-4217-addd-154ef1b1975e.txt
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