Apple Loses E-Book Collusion Case

Joe Goldman  |

U.S. District Judge Denise Cote found "compelling evidence" that Apple (AAPL) violated U.S. antitrust laws by conspiring with publishers to raise e-book prices. The ruling is a victory for the states that brought forth the charges, and could expose Apple to hundreds of millions in damages.

"Apple chose to join forces with the publisher defendants to raise-e-book prices and equipped them with the means to do so. Without Apple's orchestration of this conspiracy, it would not have succeeded as it did," said Cote.

Apple plans to appeal the decision, admitting no wrongdoing. The company and its lawyers believe that the judge made illogical and unfair assumptions about the case, and didn't have enough evidence to make an informed decision.

"We did not conspire to fix e-book pricing. When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed competition into the market, breaking Amazon's monopolistic group on the industry," said Apple spokesperson Tom Neumayr.

"There is no such thing as conspiracy by telepathy," said Apple laywer Orin Snyder, implying that elevated prices does not automatically signify conspiracy.

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The court believes, however, that it had plenty of evidence to make a fair ruling. According to the Los Angeles Times, the court discovered phone calls between Apple and the five publishers prior to the contract finalizations. Apple insists that these calls were standard negotiations.

Pending a successful appeal, the ruling could be a victory for consumers. Apple may be need to lower its prices on par with Amazon, which has a $9.99 price point for e-books. Currently, Apple typically charges between $12.99 and $14.99 for many of its titles.

The company may also be forced to pay hundreds of millions in damages to various parties. It could also face multi-year contract restrictions in the future.

While the case is one of the largest antitrust cases of the last decade, the decision will not change Apple's business strategy moving forward. The company also has approximately $150 billion in cash on hand, so hundreds of millions in potential damages means very little to the tech giant.

Consequently, shares traded relatively flat during trading on Wednesday, falling 25 cents to $422.10.

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