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After closing arguments, Apple's fate in e-book antitrust case goes to judge

Both Apple and the Justice Department made their closing salvos in a Manhattan courtroom

By Joab Jackson
June 20, 2013 07:17 PM ET

IDG News Service - "Word games," an "overreaching narrative" and a "case of inferences" were a few choice phrases from attorney Orin Snyder in his closing arguments for Apple Thursday in the U.S. Department of Justice's antitrust, e-books price-fixing case against the company.

The DOJ brought the case against Apple and five of the largest book publishers in the U.S. for allegedly conspiring to raise prices in the e-book market in 2010, in an effort to stop Amazon from pricing their best-selling electronic books at $9.99.

The DOJ and Apple both made closing arguments Thursday before Judge Denise Cote. The five publishers have already settled the case for a cumulative $164 million, leaving Apple to defend its practices. Cote presided over the three-week, non-jury trial in the U.S. Southern District Court of New York in Manhattan.

For Apple's summation, Snyder characterized the interactions Apple had with the five publishers as typical negotiations that accompany any business deal. At no point did Apple try to coordinate the activities of the publishers to fix prices. "The evidence does not show this," Snyder told the court, arguing that the DOJ made its case on "overreaching" interpretation of documents.

Snyder focused on the timeline between December 2009 and January 2010 to rebut the DOJ's assertions. He noted there was "turmoil" in the e-book market at the time, and that Apple executives, who had no prior knowledge of the market, were speaking with publishing heads just to hear their concerns. He offered multiple examples of disagreement between Apple and the publishers, in an effort to show that the parties were not acting in unison to fix prices.

The case stems from contracts Apple made with the publishers in 2010, just before it launched the iPad. In January that year, each publisher -- HarperCollins, Penguin, Hachette, MacMillan, and Simon & Schuster -- agreed to let Apple sell their books under a relatively novel business model, in which Apple would charge the prices the publishers had set and keep a 30% commission.

This approach, called the agency model, differed from the standard, decades-old wholesale model of book selling, in which the publisher, not the retailer, set the book prices. With the new approach, retailers "lost their ability to compete on price, including their ability to sell the most popular e-books for $9.99 or for other low prices," the DOJ charged in its complaint.

According to the testimony of Apple Senior Vice President Eddy Cue, publishers immediately wanted to move to the agency model when he initially approached them in December 2009 to secure electronic book rights for the iPad.

Reprinted with permission from Story copyright 2014 International Data Group. All rights reserved.
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