Apple Argues Ignorance in E-Books Antitrust Ruling Appeal

Apple Inc. (AAPL) said a ruling it violated antitrust laws should be thrown out because it didn’t know publishers were engaged in a conspiracy to fix e-book prices.

The July decision by a federal judge was based on a flawed theory of liability, Apple said in a filing yesterday with the U.S. Court of Appeals in New York. The case is based on a Justice Department lawsuit that has spurred $840 million in state and consumer claims.

“Apple had no knowledge that the publishers were engaged in a conspiracy in December 2009 or at any other point,” the Cupertino, California-based company said in the filing. “It was not unlawful for Apple to take advantage of retail market discord by using lawful agency agreements to enter the market and compete with Amazon.”

Apple this month lost its bid to halt oversight by a court-appointed compliance monitor while it pursues an appeal. U.S. District Judge Denise Cote in Manhattan concluded in July after a nonjury trial that Apple schemed with publishers to limit retail price competition and raise e-book prices.

Apple has said sales of e-books, music, movies and software and services were $12.9 billion in 2012, 8.2 percent of Apple’s total revenue. Apple introduced e-books in 2010 to boost the appeal of the newly unveiled iPad tablet as a reading device.

Gina Talamona, a Justice Department spokeswoman, said the government will file its response in May. She declined to comment further on yesterday’s filing.

Second Phase

In her ruling, Cote also found Apple liable to 33 states that joined the Justice Department’s suit. Apple faces a second phase of the case before Cote later this year. While the Justice Department didn’t ask for money damages in its case, the state plaintiffs have asked Cote to assess damages at three times the amount of $280 million.

The appeals case is U.S. v. Apple Inc., U.S. Court of Appeals for the Second Circuit (Manhattan). The district court case is U.S. v. Apple Inc., 12-cv-02826, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net; Patricia Hurtado in Manhattan federal court at pathurtado@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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