updated 10:19 pm EDT, Wed August 15, 2012
Settlement terminates existing contracts
Apple has blasted the Department of Justice over a settlement with several book publishers in an ongoing trial surrounding allegations of price fixing. The company argues that the proposed settlements would effectively nullify its existing contracts with the publishers--Hachette Book Group, HarperCollins and Simon & Schuster--before any witness has been called to testify and before the court has had a chance to review details of the case.
"[Apple] has no objection to the Proposed Judgment's bar on collusion," Apple's attorneys write in a court filing (PDF), which was posted by paidContent. "But the Government proposes to go much further. It seeks to terminate and rewrite Apple's bargained-for contracts before a single document has been introduced into evidence, before any witness has testified, and before the Court has resolved the disputed facts."
The DoJ is only settling with three publishers, however it plans to proceed with its case against Apple and two other publishers, Macmillan and Penguin. The publishers that have agreed to the settlement proposal will be barred for two years from establishing contracts that place restrictions on price discounts or other promotions.
"Nullifying a non-settling defendant's negotiated contract rights by another's settlement is fundamentally unfair, unlawful, and unprecedented," Apple argues. "The Government does not cite a single case in which such relief was granted without a trial or merits determination."
The six companies had been accused of colluding in an attempt to sustain high prices for e-books, through contractual agreements that prohibited booksellers from offering discounts. The contracts were viewed as a way to compete against rival Amazon, which routinely sells select e-books at a loss as part of a broader strategy to promote the Kindle platform.
Apple's attorneys suggest the DoJ may have "unwittingly placed a thumb on the scales in favor of Amazon, the industry monopolist." The dominant online retailer is said to be the "driving force" behind the investigation, "even hosting a two-day meeting at its Seattle headquarters" and meeting with at least 14 employees, but "not once under oath."
Apple argues that settlements should be delayed until the end of the trial. All of the defendants also face a separate class-action lawsuit in civil courts, where attorneys will represent e-book customers that may have been affected by the alleged collusion.