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Apple Says Differences in Publisher Deals Belie E-Book Conspiracy Charges

Publication Date: 
June 05, 2013
All Things Digital
John Paczkowski

Professor Mark Lemley spoke with All Things Digital's John Paczkowski about the Department of Justice's E-Book price fixing case against Apple and how the company's different publisher deals "make the government's case harder" but does not remove the potential case for conspiracy.

Central to the U.S. Department of Justice’s e-book price fixing case against Apple are the Most Favored Nation (MFN) agreements the company struck with publishers that ensured it would always be able to sell e-books at least as cheaply as rival retailers.

These contracts required publishers to match in Apple’s iBookstore any lower prices they offered elsewhere. And the DOJ has been hammering Apple over them, arguing that they spiked the average price of e-books in the U.S. once they went into effect and put Apple in an enviable position.

“[Apple's MFN] was not structured like a standard MFN in favor of a retailer, ensuring Apple that it would receive the best available wholesale price,” the DOJ argued in its complaint against the company, contending that “instead of an MFN designed to protect Apple’s ability to compete, this MFN was designed to protect Apple from having to compete on price at all, while still maintaining Apple’s 30 percent margin.”



That’s a direct refutation of one of the assertions on which the government is building its case, and it bolsters Apple’s defense — if only a bit. “It does make the government’s case harder,” Stanford law school professor Mark Lemley told AllThingsD. “But it doesn’t mean there was no conspiracy.”