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US court finds Apple guilty of conspiring to raise e-book prices

Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court

The U.S. government has succeeded in its federal antitrust suit against Apple, as the judge presiding over the case has determined that Apple conspired with book publishers to raise the price of e-books.

The decision was handed down by U.S. District Judge Denise Cote in Manhattan on Wednesday. Damages levied against Apple are to follow in a separate trial.

"The question in this case has always been a narrow one: whether Apple participated in a price-fixing scheme in violation of this country's antitrust laws," Cote wrote. "Apple is liable here for facilitating and encouraging the Publisher Defendants' collective, illegal restraint of trade.

"Through their conspiracy they forced Amazon (and other resellers) to relinquish pricing authority and they raised retail e-book prices. Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant."

Cote also dismissed the possibility that her ruling will stifle competition in the e-book market. She said her ruling is based solely on events that occurred as Apple entered the e-book market, and she does not "seek to paint with a broader brush."

Closing arguments were presented in the trial last month, on June 20. In its case, the government accused Apple of colluding with five major book publishers to falsely inflate the prices of e-books sold on the iBookstore.

Apple, for its part, denied the charges, and remained steadfast in opposition even as all five book publishers reached out-of-court settlements with the government.

Apple led the charge in convincing publishers to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform.

In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by market leader Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so.