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Apple Inc. (AAPL) Gets Terse DoJ Rebuttal in E-book Price Fixing Case

Apple Inc. (NASDAQ:AAPL) seems to be making more headlines in the courtrooms across America than it is with its technology innovations and its expected release of new i-devices in the coming weeks. We’ve reported that the Apple-Samsung patent-infringement case is in jury deliberations, plus Apple attorneys filed a motion to appeal a bankruptcy judge’s ruling about a couple of Eastman Kodak patents, and now just a week after Apple filed a motion blocking a proposed settlement with the U.S. Department of Justice regarding allegations of price fixing in the e-book market, the DoJ has struck back.

Apple Inc. (NASDAQ:AAPL)

Apple Inc. (NASDAQ:AAPL) has been part of a price-fixing investigation with several publishers, which the DoJ accused to working together to inflate e-book prices as an effort to draw competition away from Amazon.com Inc. (NASDAQ:AMZN), which is the leader in e-book sales. The “agency method” of pricing that was set involves the publishers setting prices for the e-books they distribute, rather than the retailers setting the prices – also known as the “wholesale method.” The wholesale method was in place in the e-book market until about two years ago, about the time that Apple Inc. (NASDAQ:AAPL) started to get involved in selling e-books through its online store to go with its iPads. The DoJ announced a proposed settlement with three of the publishers, though Apple and two other publishers had not signed off.

Apple Inc. (NASDAQ:AAPL) filed a brief last week expressing its opposition to the settlement, saying it was unfair and not in the public interest  – even going so far as calling the settlement “unprecedented” in that it would have required all the publishers to void their contracts with Apple – even those who did not accept the settlement terms. Well, a week after that brief was filed, the Justice Department shot back with a brief of its own, urging the court to accept the terms of the settlement because Apple’s objections were based on its own interests and not the “public interest” as is considered a criterion for a fair and just settlement.

The government brief stated, “In reality, what troubles Apple is that the decree returns pricing discretion not just to Apple, but also to its retail competitors — competitors which Apple fears may choose to exercise that restored authority in order to lower e-book prices. In that event, Apple’s e-book customers might find less expensive alternatives. Apple’s desire to avoid price competition for as long as possible is the unstated reason why it seeks to undo or forestall the settlements. … In short, Apple’s own interests motivate its objections to the proposed decree, interests that are not in any way linked to the public interest inquiry mandated by the Tunney Act.”

Clearly this case will be “forestalled” a little bit longer, whether for the benefit or detriment of Apple Inc. (NASDAQ:AAPL). Stay tuned.

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