In its attempt to obtain a foothold in a market long dominated by Amazon, Apple ran afoul of antitrust law.
Apple is sliding back under the judicial microscope Monday in a legal challenge that could bear big implications for the e-book market. The 2nd U.S. Circuit Court of Appeals is slated to hear the company's appeal of a verdict that found it guilty of violating antitrust law.
Last year, a federal judge ruled that Apple had knowingly facilitated a price-fixing conspiracy with the five major publishing companies: Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster. In a bid to pressure Amazon — then and now a goliath of the e-book market — Apple and these publishers had agreed to set the price of e-books higher than Amazon's preferred price. The judge denounced these agreements as collusion, rendering her verdict in no uncertain terms.
"The evidence is overwhelming that Apple knew of the unlawful aims of the conspiracy," U.S. District Judge Denise Cote wrote in her opinion. To believe Apple's case, she continued, "a fact-finder would be confronted with the herculean task of explaining away reams of documents and blinking at the obvious."
While the publishers settled their side of the case early on, Apple has vowed repeatedly to keep fighting. The latest round is expected to help clarify the legal line drawn between friendly business agreements and outright collusion.
As Philip Elmer-DeWitt notes in Fortune:
"When the Department of Justice charged Apple with conspiring to fix the price of e-books, the case was widely seen in both Silicon Valley and New York publishing circles as an error of enforcement.
"Why was Apple, a giant in its own right but a new entrant in the e-book market, being prosecuted and not that other giant, Amazon? ...
"But when District Judge Denise Cote sided with the DOJ and ruled that Apple had violated the Sherman Antitrust Act, what had been a question of enforcement became a question of law."
Although Monday's hearing is expected to last about an hour, a ruling won't be rendered for several months more. And Elmer-De Witt says a verdict against Apple could very well mean this case is headed to the Supreme Court.
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