US: Apple says DOJ, Judge got it wrong in eBook antitrust analysis

A federal appeals court did not immediately decide on Apple’s appeal of an earlier ruling that found the company to have conspired to fix eBook prices, say reports, as the high-profile case earns more attention.

Oral arguments were held Monday at the 2nd US Circuit Court of Appeals. The technology giant is looking to reverse US District Judge Denise Cote’s ruling that Apple violated antitrust law in fixing eBook prices, a decision stemming from the lawsuit filed by the Department of Justice.

But since the ruling, which eventually lead to an independent antitrust monitor, state class action filings, and more appeals, experts are questioning whether Judge Cote got it wrong.

Apple’s appeal surrounded the argument that the company was a new entrant in the eBooks market that was already dominated by Amazon. Lawyers for the company argued Monday that Amazon’s monopoly power allowed it to price eBooks at artificially low costs.

Apple entered the scene, lawyers argue, and offered new pricing options. “That’s competition,” Apple lawyer Theodore J. Boutrous Jr. said. “That’s not price-fixing.”

According to reports, at least one member of the three-judge panel seemed skeptical of the DOJ’s argument. Circuit Judge Dennis Jacobs is said to have accepted Apple’s argument, declaring that, in one possible interpretation of the situation, “these people got together to defeat a monopoly.”

But with a closer look into Apple’s argument, experts note that the case has major implications for antitrust law and teeters on complex antitrust theory.

The company is arguing that vertical price-fixing arrangements are not per se illegal; in Apple’s appellate brief, the company pointed to the Supreme Court decision on Leegin Creative Leather Prods v. PSKS to show precedent that weighs vertical price restraints by the “rule of reason” approach.”

The Solicitor General’s office raised eyebrows last week when it was revealed a member of the office would join the DOJ in defending its case against Apple, sparking rumors the suit could be headed to the Supreme Court itself.

Full content: Fortune and ABC News

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