Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Apple Inc. (AAPL) to DOJ: No Antitrust Settlement Until After E-book Trial

Apple Inc. (NASDAQ:AAPL) is having none of what the U.S. Department of Justice is selling in an antitrust lawsuit filed by the federal government against Apple and five book  publishers regarding charges that they all participated in price-fixing of their e-books to compete with Inc. (NASDAQ:AMZN).

Apple Inc. (AAPL), Inc. (AMZN), Barnes & Noble Inc. (BKS)

The government put forth a settlement offer to each of the defendants to break up any alleged collusion between Apple Inc. (NASDAQ:AAPL) and the five publishers. The government contends that Apple worked with the five publishers to establish set e-book prices to undermine Inc. (NASDAQAMZN) and sales away from the e-book retail leader by inflating prices through what is called the “agency model,” in which publishers determine prices of e-books and not retailers, which is called the “wholesale model.” The wholesale model was used until 2010, when the popularity of the iPad moved publishers toward the agency model. Since then, prices for e-books have risen, and discount retailers like Inc. (NASDAQ:AMZN) and others have felt the pinch in the marketplace.

The Department of Justice filed suit in April and announced recently it had reached a settlement with three of the publishers – Hachette Book Group, HarperCollins and Simon & Schuster – which included a provision that the publishers terminate their existing contracts with Apple Inc. (NASDAQ:AAPL). Apple came back with a memo filed Wednesday blasting the settlement proposal as “fundamentally unfair, unlawful, and unprecedented,” saying that non-settling publisher contracts with Apple should not be voided due to the settlement by another publisher. Apple even went so far as to claim that the government brought antitrust charges on behalf of Inc. (NASDAQ:AMZN), mentioning in a footnote of the memo that “Amazon … told a story to the Government that has yet to be scrutinized. Amazon talked with the Government repeatedly … even hosting a two-day meeting at its Seattle headquarters. In all, the Government met with at least fourteen Amazon employees — yet not once under oath. The Government required that Amazon turn over a mere 4,500 documents, a fraction of what was required of others.”

Still a year away, and already the price-fixing e-book battle is getting white-hot, with a lot of growing market share at stake for Apple Inc. (NASDAQ:AAPL) and Inc. (NASDAQ:AMZN). There is little question that a number of investors will be watching these developments closely – including hedge funds invested in Apple and – like  David Einhorn’s Greenlight Capital and Ken Fisher’s Fisher Asset Management, respectively.