Apple Loses Appeal in E-Books Antitrust Case

By Professor Jeffery Atik

This is an excerpt from Attraverso

Through a series of spectacular commercial moves, Apple succeeded in disrupting the e-book space upon its 2009 release of the iPad, sweeping away Amazon Kindle’s popular $9.99 pricing for new releases and for New York Times best-sellers. The iPad brought meaningful competition to Amazon’s wildly successful Kindle as an e-book platform; the emergence of this new distribution channel raised e-book prices, whether purchased on iPads or Kindles, seemingly defying an economic law of gravity. It was a coup that only a Steve Jobs could pull off. The e-book price shift attracted the attention of federal and state antitrust authorities. In 2012, the government brought a civil antitrust action against Apple and five major publishers. The book publishers settled, and the government proceeded in a price fixing claim against Apple. On June 30, a panel of the Second Circuit Court of Appeals upheld a federal trial court’s finding that Apple violated Section 1 of the Sherman Act.

Apple’s play in resetting the commercial terms of e-book distribution was brilliant, even if (as the courts have now determined) illegal. The Apple e-book case addresses some major issues in contemporary antitrust law. May a party, in a vertical relationship with a producers cartel, be found liable for price fixing? Does such a situation constitute a per se antitrust offense?

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