The US Department of Justice sued Apple and six publishers, alleging that they had conspired to fix price. It all centers around the switch from a wholesale model of selling e-books from the publishers to retailer(such as Amazon) to using the agency m...
The US Department of Justice sued Apple and six publishers, alleging that they had conspired to fix price. It all centers around the switch from a wholesale model of selling e-books from the publishers to retailer(such as Amazon) to using the agency model of selling books that Apple and the publishers agreed to adopt in early 2010. All of the publishers have already settled with DOJ. but Apple have vowed to fight the allegations. Per se price-fixing agreements may also include those where a vertical player participates in and facilitate a horizontal conspiracy. Where a vertical player is alleged to have participated in an unlawful horizontal agreement, plaintiffs must demonstrate both that a horizontal conspiracy existed, and that the vertical player was a knowing participant in that agreement and facilitated the scheme. DOJ must establish that the MFN provision that Apple instated be included in its agency model contracts with the publishers ran afoul of the Sherman Act to prove liability. The MFN provision may not be illegal in and of itself, however, and therefore must be shown to have an adverse impact on competition. It is well established that in evaluating the reasonableness of any vertical practice, both its anticompetitive and efficiency-enhancing potential must be considered. Whatever happens in the case is like to influence not only the e-book industry, but other industries where digital media is becoming more common.