Apple could fork over $400M to settle e-books price-fixing suit
The settlement hinges on the success or failure of the company's appeal of a ruling that found it conspired with publishers to fix prices.
Apple has agreed to pay $400 million to consumers hurt by e-books price-fixing, but only if the company's appeal of the original antitrust ruling doesn't succeed.
The Cupertino, Calif., electronics giant last month said it had agreed to settle an antitrust lawsuit, brought by attorneys general in 33 states, that sought hundreds of millions of dollars in damages in regard to Apple allegedly conspiring with book publishers to fix e-book prices.
The attorneys on Wednesday said Apple would pay $400 million, adding to the $166 million the states received from the publishers involved in the price-fixing scheme. However, the amount could change if Apple wins its appeal in the original e-books price-fixing trial won by the US Department of Justice in 2013.
If the court of appeals reverses and remands the case back to district court, the settlement agreement calls for Apple to pay consumers $50 million to settle their damages claims, while the DOJ and states' attorneys general would remain free to continue litigating their claims for injunctive relief. If the court of appeals flat-out reverses the lower court decision, Apple would pay no damages.
Apple on Wednesday maintained its innocence and said it will continue to fight the allegations on appeal.
"We did nothing wrong and we believe a fair assessment of the facts will show it," the company said in a statement. "The iBooks Store has been good for consumers and the publishing industry as a whole, from well-known authors to first-time novelists. As we wait for the court to hear our appeal, we have agreed to a settlement which is contingent on the outcome of the appeal. If we are vindicated by the appeals court, no settlement will be paid."
The damages lawsuit brought by the states, which prior to the settlement agreement had been scheduled to begin July 14, was connected to a lawsuit filed by the Justice Department in April 2012. That suit accused Apple and five of the largest US book publishers of conspiring to set e-book prices and working together to break Amazon's hold on the market with its Kindle e-book reader. After a nonjury trial, US District Court Judge Denise Cote concluded that Apple orchestrated a scheme with publishers to fix the prices of e-books. Apple is appealing that ruling.
As part of the initial ruling, Cote ordered Apple to modify its agreements with book publishers and hire an external compliance monitor for two years. Apple has strenuously argued against having a monitor, but the DOJ has said the measure is essential to make sure the electronics giant doesn't violate antitrust laws again.
Meanwhile, the state attorneys general had sought $280 million in damages but asked in January that the amount be tripled to $840 million because the US had already "conclusively proven" that Apple had orchestrated the conspiracy. As the case proceeded into the damages phase, Apple sought dismissal of the attorneys general case, contending that the states lacked standing to seek damages against Apple.
After Cote denied that motion in April, a federal appeals court in May denied Apple's petition for an emergency stay of district court proceedings pending resolution of an appeal concerning the case's class status.
Updated at 10:15 a.m. PT: Adds background information.