Apple Inc. has agreed to pay up to $400 million to settle claims brought by 33 state attorneys general and private class action Plaintiffs that the company conspired to fix prices on e-books, bringing potential compensation for e-book purchasers up to $566 million. Apple agreed to pay $400 million to consumers, as well as $50 million in payments to the states and attorneys’ fees, if the lower court’s July 2013 liability ruling against the company is affirmed by the Second Circuit.
If the decision is remanded for reconsideration, Apple will pay $50 million to purchasers, along with $20 million in attorneys’ fees and state payments. But Apple will pay nothing if the lower court’s ruling is reversed. When combined with the $166 million already paid by publishers in earlier settlements, consumers stand to receive up to $566 million if the lower court’s liability judgment against Apple is upheld.
New York Attorney General Eric T. Schneiderman praised the settlement in a statement, saying it proves “even the biggest, most powerful companies in the world must play by the same rules as everyone else.” Steve Berman, a lawyer with the Hagens Berman Sobol Shapiro firm, who represents e-book purchaser Plaintiffs in the case, believes the settlement is “confirmation that the antitrust laws apply equally to all citizens.” Steve had this to say:
We have obviously studied [U.S. District Judge Denise Cote's] July 2013 ruling in detail, and believe that the Second Circuit will agree with her conclusion that Apple did violate federal antitrust laws.
Three publishers – Hachette Book Group Inc., HarperCollins Publishers LLC, Simon & Schuster Inc. – agreed to settle with the Department of Justice (DOJ) before it even filed the case, while Penguin Group USA Inc. and Holtzbrinck Publishers LLC reached similar settlements in the run up to the liability trial with the DOJ and the states. After going to trial in early 2013, Judge Cote ruled in July that Apple had orchestrated a plot with the five publishers to raise e-book prices by moving from a wholesale model in which retailers set the final price to an agency distribution model in which the publisher set the price and the retailers take a commission. Judge Cote’s ruling established Apple’s liability for violations of a section of the Sherman Act that bars conspiracies to restrain trade.
Apple, which is appealing the liability finding and the government’s injunction, wanted to get a trial on damages in the suit put on hold while the Second Circuit reviews the case, but its most recent effort failed to sway the appeals court in late May. Based on reports, the company could have faced huge damages in the case. The Plaintiffs’ damages expert calculated the actual damages in the case to be $280 million, which could have been trebled to $840 million. Even after offsetting that by the $166 million the publishers paid out, Apple could have been responsible for $674 million.
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