Chelsea Abell
BUS-222
Dr. Kidder
April 15, 2016
U.S. v. Apple Inc., 2nd U.S. Circuit Court of Appeals, No. 13-3741
Background of the Case:
In the United States, there are six major publishing companies. The six major companies own the right to fix an e-book’s price. It was reported in 2010 that collectively these publishing companies were responsible for 48% of the total e-book market space. E-books are generally sold at a lower price compared to their hard cover copies. The only company which sold E-books during 2010 was Amazon. The publishers wanted that E-books should be sold if not at higher price than at least at the same price.
These CEOs of these six publishing companies used to meet once every three months to meet and to address Amazon’s pricing policies. They used strategies like selling E-books at the same price as their hard cover books through a “windowing” model,
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"a combination or some form of concerted action between at least two legally distinct economic entities.”
2. "Constituted an unreasonable restraint of trade either per se or under the rule of reason."
The main defense that Apple Inc. relied on was the lack of evidence in support of the plaintiff’s claim that Apple Inc. acted to enhance their own business interests. Apple also claimed that there no evidence to prove that they wanted the raise e-book prices. They claimed to be a mere bystander. Apple argued that the case should be seen in the light of fair competition and if at all the decision would not be in Apple’s favor then it would set a bad precedent since it would discourage other players to enter the market, which is extremely unhealthy for a growing economy.
Apple said that it was done only to achieve the business objective and to provide consumers the best options. However, enough evidence was found making Apple an active co-conspirator in this deal. Evidence pointed out that Apple wanted to raise the prices of the E-books and wished to eliminate retail market