Apple wants DOJ to wait till end of trial for settlement with three publishers

Apple called the proposed judgment "fundamentally unfair"

Apple has opposed a government proposed judgment in an e-books price-fixing lawsuit, stating that the judgement seeks to terminate and rewrite its contracts "before a single document has been introduced into evidence, before any witness has testified, and before the court has resolved the disputed facts."

The company submitted in a memorandum on Wednesday to a court in New York that it should not impose a penalty on Apple "before it has had its day in court," asking the court to defer judgment until after trial, ten months away.

"Once its existing contracts are terminated, Apple could not simply reinstate them after prevailing at trial," it added.

The judgment proposed by the Department of Justice aims to settle the case with three of the five publishers named as defendants in its complaint -Hachette Book Group, HarperCollins Publishers, and Simon & Schuster. Apple has previously opposed the settlement.

The Department of Justice filed in April an antitrust lawsuit against Apple and five large publishers, accusing the companies of working together to raise prices of e-books, in retaliation for competitor Amazon.com pricing most e-books at US$9.99 beginning in late 2007.((

Apple, also a defendant in the case, has declined to settle the case which is scheduled for trial in June 2013.

In its memo, Apple reiterated that it has never participated in, encouraged, or sought to benefit from collusion, and has no objection to the proposed judgment's bar on collusion.

But without Apple's consent and without a trial, the proposed judgment automatically terminates Apple's agreements and effectively bars Apple and other retailers from selling e-books under the agency model for two years, Apple said in the filing before the U.S. District Court for the Southern District of New York.

"There is no explanation why or how the public interest will be served if the eBook industry returns to the conditions that prevailed when one monopoly seller dictated eBook prices through a strategy of loss leading certain titles for certain periods of time," Penguin said in a filing, also on Wednesday, in an apparent reference to Amazon.com. Any pre-existing empirical analyses done by the government to support its proposed settlements either do not exist or have been kept secret, it added.

The publishers allegedly teamed up with Apple to counter Amazon's strategy to lower substantially the prices of newly released and best-selling e-books to $9.99, a price that the defendant publishers saw as a challenge to their traditional business model, the DOJ said in its complaint in April. In early 2010, the defendant publishers agreed to shift to a new pricing model called the agency model, where they set the prices for e-books, instead of retailers, the DOJ alleged.

In a memorandum in support of its motion for entry of final judgment, filed earlier this month, the government said that its proposed judgment, filed on the same day as the complaint, will end the participation by settling defendants in the alleged collusion, and begin to restore competitive conditions to the e-book marketplace.

"This case is about an alleged conspiracy to force Amazon to adopt agency," Apple said in its memo. "Thus, a settlement enjoining collusion or precluding publishers from forcing agency on Amazon would be appropriate."

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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