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US Government attorneys yesterday accused Apple of illegally trying to raise the prices of e-books at the start of an anti-trust case alleging a price-fixing conspiracy between the company and top US publishers.
Apple has denied wrongdoing in the case, which centres around agreements reached by the company’s late chief executive officer, Steve Jobs, and five of the top six US publishers before Apple introduced the iPad in 2010.
The Government claims they colluded to sabotage Amazon, which at the time dominated the e-book market by selling most titles for 9.99 dollars.
According to the lawsuit, Apple and the publishers agreed to so-called agency contracts. These set minimum prices for books, which the publishers could then enforce on Amazon. Apple would take 30 per cent of the retail price and was not allowed to lower the prices set by the publishers, according to the deal.
“Apple knew that the major publishers also disliked Amazon’s low prices and saw Apple’s potential entry as a pathway to higher retail prices industrywide,” the US said in a court filing in April.
Apple and five of the six biggest US publishers “consciously committed to a scheme to raise e-book prices throughout the industry” that cost consumers hundreds of millions of dollars, Justice Department lawyer Lawrence Buterman told US District Judge Denise Cote in opening statements, according to Bloomberg News.
The five publishers who signed agency contracts with Apple have already settled with the US, individual states and private plaintiffs for $164 million. They are Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan unit, CBS’s Simon & Schuster, Lagardere SCA (MMB)’s Hachette Book Group, Pearson Plc’s Penguin unit and News Corp.’s HarperCollins.
In court papers Apple has said the Government’s case is based on “faulty assumptions and unfounded conclusions.” The agreements “set forth the terms of Apple’s business relationship with each publisher; they placed no constraints on how a publisher should deal with other retailers, including Amazon,” Apple said.
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