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Apple on trial in New York for ebook price fixing charges

Apple are on trial in New York in relation to price fixing charges brought by the U.S. government.

Apple will face the U.S. Department of Justice in a non jury trial under the control of Judge Denise Cote for the U.S. District Court for the Southern District of New York. In her pre-trial hearing it has been indicated that she may rule against the company.

The DOJ filed an antitrust lawsuit back in April last year. They alleged that Apple and five publishers Macmillian, Hachette, Simon & Schuster, HarperCollins and Penguin Group have conspired to raise ebook prices.The publishers have all settled and have agreed to stop prohibiting wholesale discounts and to pay a cumulative $164 million.

The DOJ claim that Apple and the five publishers worked against Amazon who set the price of most ebooks at $9.99 beginning in late 2007.

The trial is expected to feature testimony from high ranking publishing executives who will face questions on behind the scenes moves.
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PC World add “Apple, in a court filing in May, said that the publishers in 2009 had on their own pursued a so-called agency business model to sell ebooks where the publisher would set the price or a price range for each ebook and the retailer, acting as an agent, would receive a commission on each ebook sale. The publishers also discussed raising wholesale prices of ebooks, Apple said in the filing.Apple said at that point it stepped in to negotiate with publishers to set up its own iBooks ebook store. As an agency business model had helped the company in its App Store, where the developer fixed the consumer price, Apple said it favored an agency model with the publishers that gave it 30 percent commission.

By the time Steve Jobs unveiled the iPad on Jan. 27, 2010, Apple had content deals in place with Hachette, Macmillan, Penguin, and Simon & Schuster.

However, Apple said it did not enter into or facilitate a conspiracy to eliminate price competition or raise prices in the ebook industry.”

In a pretrial hearing last month, U.S. District Judge Denise Cote said she believed that the government has a strong case.

According to published reports she said “I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of ebooks, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that.”

Kitguru says: If Apple lose the battle they will not get a fine, but will have to confirm they will not engage in conduct related to price fixing in the future.

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