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Judge in Apple e-book case suggests 'staggered renegotiations'

updated 01:24 am EDT, Wed August 14, 2013

Rebuffs DOJ suggestion of no contracts for five years

In a statement that was not part of her recent rulings, US District Court Judge Denise Cote may have rebuffed parts of the Department of Justice's "draconian" remedies proposal against Apple after Cote ruled the computer maker guilty of conspiring with e-book publishers to fix prices. During a hearing on Friday, Cote offered some guidelines on remedial actions and said that she wanted to schedule another hearing soon. One of the guidelines was that Apple could "stagger" renegotiations with publishers, compared to the five-year moratorium suggested by the DOJ.

The DOJ proposal would bar Apple from entering into any contracts with major publishers for a period of five years, effectively handing the entire e-book market back to Amazon and leaving only Android tablets (including Amazon's Kindle, which is an Android off-shoot) able to offer new titles.

Cote's proposal allows Apple to negotiate new contracts with book publishers, but staggered over several years so that the company is in negotiations with only one publisher at a time. She also indicated that she would prefer Apple develop its own "vigorous internal antitrust program" and "convince the court there's no need" for a government monitor for antitrust compliance, an idea the DOJ proposal called for that would be in force for 10 years.

Publishers and Apple have heaped scorn on the DOJ remedy proposal, saying it harms them more than Apple, and effectively gives Amazon back an abusive monopoly in e-book sales. They want to keep the existing agreements they have with Apple, and that the government has no right to force them to terminate the contracts.

Cote rebuffed a lengthy set of arguments made by Apple's lawyer that revealed that the judge had ignored emails that would have rebuffed the government's case, excluded testimony from a Random House executive that exonerated Apple, and disallowed other evidence in her ruling. Lead Apple attorney Orin Snyder said that her errors and pre-trial admissions of bias meant that Apple had a "substantial possibility of prevailing on appeal."

The company is already planning an appeal but wanted Cote to suspend further proceedings until the appeal is heard, which she unsurprisingly declined to do. Apple will likely also appeal that decision, hoping to buy time to craft a fairer and more reasonable penalty, as well as convince future judge's that Cote's decision and the suggested penalties will have unintended consequences that will harm consumers.




by MacNN Staff

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Comments

  1. Marook

    Forum Regular

    Joined: 05-05-99

    If it's free world, why doesn't the publishers simply drop the contracts with Amazon, if they don't like how Amazon is treating them?

  1. chas_m

    MacNN Staff

    Joined: 08-04-01

    Two reasons:

    1. If there is a legal contract, you can't just drop it because you feel like it. That's why contracts exist.

    2. Because then the DOJ would accuse them of conspiring again, on the same lack of evidence they had that Apple pushed them to conspire.

  1. chas_m

    MacNN Staff

    Joined: 08-04-01

    Oh yes, third reason: then where would they sell their e-books? It's basically Apple or Amazon. B&N et al make up a very small percentage of e-books sold.

  1. shawnde

    Fresh-Faced Recruit

    Joined: 04-01-08

    @chas_m, re: Third Reason

    Well, technically the only reason B&N and Sony are NOT doing so well, is because Amazon is there. If they chose to stop dealing with Amazon, and not sell to them, then the opportunity for the other small players will become huge .... Just imagine if iTunes were shut down tomorrow for some arbitrary reason ... how well do you think Amazon MP3 would do? Pretty darn well.

    And on your initial comment on contracts ... most contracts have an exit or termination clause with a 60-day or 90-day notice period. They're forcing Apple to do it ... I'm sure it can be done for Amazon as well. Basically they would stop selling e-Books to Amazon. It can be done. However, it will NEVER happen. The music publishers never dared to mess with Apple, and book publishers are so profit driven, that they wouldn't even consider it for a minute.

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