Apple Guilty In E-Book Case (NASDAQ:AAPL)

AppleA federal judge said the words of Steven P. Jobs helped persuade her that Apple had violated antitrust law. Apple had been accused of conspiring with publishers to raise prices of e-books. The ruling will probably not have an immediate effect on the book-buying public, but it will affect how Apple cuts deals with media companies in the future.

Denise L. Cote of United States District Court in Manhattan said in her ruling that Apple had taken advantage of the publishers’ “fear of and frustration” over’s control of e-book pricing. Apple gave the publishers a tight window of opportunity to cooperate with Apple in the weeks leading up to the iPad’s introduction in 2010. She wrote, “Apple seized the moment and brilliantly played its hand.”

The Justice Department said the decision was a victory for anyone who buys e-books. The Justice Department said in a statement, “Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so. This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions.” Charles E. Elder, an antitrust lawyer at Irell & Manella, said that the ruling could lead companies negotiating with each other to “proceed with extreme caution” to avoid any appearance of collusion.

Apple continues to fight the charges. The company has asserted that it had done nothing wrong and announced its decision to appeal the ruling. The company said publicly it refused to settle as a matter of principle. Tom Neumayr, an Apple spokesman, said, “Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations. When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry.”

The five major publishers that had also been named in the suit all settled before the trial. Under the settlement’s terms, publishers are prohibited from restricting a retailer’s ability to discount books. Mike Shatzkin, the founder and chief executive of the publishing consultant Idea Logical Company, said, “The changes to the industry have already happened.”