Simpsons Solicitors

Apple Out Of Appeals on Book Price Fixing

March 11th 2016

The US Supreme Court (the top level court in the US) has denied an application from Apple to hear an appeal from a federal Court of Appeal decision that held Apple liable for price-fixing.

The basis for the Court of Appeal decision was that Apple’s “agency” model – coupled with the agreement of publishers not to sell their books elsewhere at a lower price than granted to Apple – was anti-competitive, particularly in light of the role that an Apple vice-president played in negotiating the model with major publishers.

In trying to convince the Supreme Court to hear the appeal, Apple argued that – far from being anti-competitive – its actions in fact had enhanced competition, by providing consumers with a new e-book platform. Apple also stated that, “Following Apple’s entry, output increased, overall prices decreased, and a major new retailer began to compete in a market formerly dominated by a single firm”.

The Court of Appeal decision has been hugely contentious in business and publishing circles, because the conduct that the court found was anti-competitive was clearly aimed at breaking the almost monopoly power of Amazon in relation to the sale of eBooks. That power was built on a model of selling e-books at less than wholesale price, in order to boost sales of the Kindle reader (and had led to giving Amazon an all-but-unassailable market share – estimated at the time Apple entered the market at 90%.

As one commentator (in Forbes magazine) has recently written, the Court of Appeal decision means that “an innovative 21st-century business model fell victim to 19th-century antitrust law“:

http://www.forbes.com/sites/danielfisher/2016/03/07/supreme-court-refuses-to-overturn-apples-e-book-antitrust-loss/#269b973e5b95.

If you need advice on anti-competitive conduct under Australian law, or on whether any co-operation you engage in with trade rivals might put you in breach of Australian provisions about anti-competitive conduct, contact Adam Simpson or Ian McDonald at Simpsons Solicitors.