In a decision that could reshape how e-books (and wishfully, digital music) are sold on the Internet, a federal judge in Manhattan has ruled that Apple Inc conspired to raise the retail prices of e-books in violation of antitrust law, and has called for a trial on damages. Apple had been accused of colluding with five publishers to boost e-book prices beginning in late 2009, as the Silicon Valley giant was preparing to launch its popular iPad tablet. The U.S. Department of Justice said this conspiracy was designed to undercut online retailer Amazon.com Inc’s dominance of the fast-growing e-books market. Only Apple went to trial, while the publishers – Hachette Book Group, Macmillan, News Corp’s (surprise, surprise) HarperCollins, Penguin Group and CBS Corp’s Simon & Schuster – settled with the U.S. government and the states. The federal judge noted that the conspiracy resulted in prices for some e-books rising to $12.99 or $14.99, when Amazon had sold the same books for $9.99.
U.S. District Judge Denise Cote said:
“The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy. Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010.”