Legal experts say US Justice Department doesn’t have a strong case against Apple

Thu, Apr 12, 2012

Legal, News

With the US Justice Department now moving full steam ahead in its antitrust lawsuit against Apple and an assortment of publishers, antitrust legal experts are claiming that the governments case against the publishers is much stronger than their case against Apple.

CNET reports:

One reason lies in the Justice Department’s 36-page complaint, which recounts how publishers met over breakfast in a London hotel and dinners at Manhattan’s posh Picholine restaurant, which boasts a “Best of Award of Excellence” from Wine Spectator magazine. The key point is that Apple wasn’t present.

The Department of Justice “has a far better case against the publishers than Apple,” says Dominick Armentano, professor emeritus of economics at the University of Hartford and author of Antitrust and Monopoly who’s now affiliated with the Independent Institute in Oakland, Calif. “If the CEOs of the various publishers got together in hotel rooms to discuss prices, they are sunk” and might as well settle, he says.

Richard Epstein, the prolific legal scholar and professor of law at New York University, goes further. Epstein argues in an essay published yesterday that there are “difficulties” with the Justice Department’s case against publishers as well: “It will take some time to hear the whole story, but the betting here is that this lawsuit is a mistake.”

Yesterday we noted how 3 publishers chose to settle with the Government and agreed to pay out damages to consumers, a settlement offer Apple chose to refuse. Further, the extent of the Government’s case seems to rest on publishers meeting together (sans Apple) without lawyers present to discuss the agency model. But the publishers may very well assert that they were discussing the agency model alone and not necessarily plans to collude to raise prices.

What’s almost amusing here is that Amazon is the world’s largest seller of e-books with a 90%+ marketshare. Perhaps I need to brush up on antitrust law, but it seems strange that Apple is in the equation given their relatively paltry marketshare in ebooks.

Lastly, CNET cites an impassioned letter from Scott Turow, president of the Authors Guild and famed author of One L, a book describing the trials and tribulations of a first year law student at Harvard.

Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open… Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90 percent to roughly 60 percent… Brick-and-mortar bookstores are starting to compete through their partnership with Google, so loyal customers can buy e-books from them at the same price as they would from Amazon. Direct-selling authors have also benefited, as Amazon more than doubled its royalty rates in the face of competition… The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition.



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