Apple calls e-book settlement "unfair, unlawful, and unprecedented"

By on August 16, 2012, 2:00 PM

In a statement issued yesterday, Apple lambasted the Department of Justice over supporting a government-proposed settlement intended to resolve possible e-book price-fixing practices. The company criticized the settlement as "fundamentally unfair, unlawful and unprecedented", accusing the DOJ of attempting to rewrite its bargained-for contracts with virtually no due process. For good measure, Apple also managed to throw Amazon under the bus as an industry monopolist.

The statement's strongly-worded title for Section II, "The settlement unlawfully penalizes Apple without a trial", does a fair job of summarizing Apple's foremost complaint. The company's letter goes on to accuse the U.S. government of trying to solve a problem without making any effort to actually determine if Apple really did violate antitrust laws to begin with.

In its statement to the court, Apple came out swinging in its introduction paragraph:

It [U.S. government] seeks to terminate and rewrite Apple’s bargained-for contracts before a single document has been introduced into evidence, before any witness has testified, and before the Court has resolved the disputed facts. Once its existing contracts are terminated, Apple could not simply reinstate them after prevailing at trial. The Court’s decision would be irreversible. Nullifying a non-settling defendant’s negotiated contract rights by another’s settlement is fundamentally unfair, unlawful, and unprecedented.

As Apple's iPad began to sell en masse, publishers started shifting to an agency model for their e-books. An "agency model" empowers publishers to set retail prices rather than retailers themselves as opposed to a "wholesale model" where retailers are free to set their own pricing. The agency model is often to used to protect the value of goods -- an important goal to modern publishers who are now selling near-infinitely-reproducible electrons with no real intrinsic value.

Federal prosecutors originally filed the antitrust lawsuit in April of this year. The defendants, who included five major book publishers and Apple, were accused of conspiring to artificially inflate digital books. The same day, three of those publishers agreed to settle based on the proposed terms, but a stalwart Apple and two other publishers have remained defiant since.

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