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Apple Worked to Fix E-Book Prices, U.S. Says in Filing

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(Corrects Murdoch job title in third paragraph of story published May 14.)

May 14 (Bloomberg) -- Apple Inc. engaged in a horizontal price-fixing scheme with some of the U.S.’s largest publishers to violate antitrust laws by working “to strip retailers of pricing authority,” the U.S. Justice Department said in a court filing.

The department’s Antitrust Division filed papers for a trial set to begin June 3 in federal court in Manhattan that included excerpts of e-mails and depositions of Apple executives including the company’s late founder, Steve Jobs, and Senior Vice President Eddy Cue and publishing executives.

In an April 26 memo made public today, the U.S. cited evidence in its case such as an e-mail sent by Jobs to James Murdoch of News Corp., the parent company of the HarperCollins book division.

“Apple’s iTunes Store and App Store have over 120 million customers with credit cards on file and have downloaded over 12 billion products,” Jobs, who died in October 2011, said in an undated e-mail. “This is the type of online assets that will be required to scale the e-book business into something that matters to the publishers.”

The U.S. sued Apple and a group of book publishers in 2012, claiming they conspired to raise prices for electronic books in violation of U.S. antitrust law.

“Apple did not conspire to fix eBook pricing,” Tom Neumayr, a spokesman for the Cupertino, California-based company said in an e-mail today. “We helped transform the eBook market with the introduction of the iBookstore in 2010 bringing consumers an expanded selection of eBooks and delivering innovative new features. The market has been thriving and innovating since Apple’s entry and we look forward to going to trial to defend ourselves.”

Apple said in court papers filed April 26 and made public today that it engaged in “one-on-one, and at times contentious negotiations” with book publishers over e-books. Apple said it “never spoke to more than one publisher at the same time” during its negotiations and had no knowledge of any intra-publisher communications during the time Apple was negotiating its agency agreements.

“After this lawsuit was filed, Apple learned for the first time about allegations relating to various publisher meetings, phone calls, and dinners,” Apple said, citing the deposition of Cue. “Apple had no information about any such communications during its iBookstore negotiations.”

The case is U.S. v. Apple Inc., 12-cv-02826, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

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

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