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District Court Enters Injunction Against Apple in E-books Case
Practical Law Legal Update 2-540-4146 (Approx. 4 pages)
District Court Enters Injunction Against Apple in E-books Case
by Practical Law Antitrust
| Published on 06 Sep 2013 • USA (National/Federal) |
US District Court Judge Denise Cote entered a permanent injunction against Apple, Inc. restricting its ability to enter agreements with e-book publishers. The injunction also includes a court-appointed external compliance monitor and requires Apple to adopt an antitrust compliance program.
On September 5, 2013, US District Court Judge Denise Cote entered a permanent injunction against Apple, Inc. restricting its ability to enter into agreements with e-book publishers. The injunction also includes a court-appointed external compliance monitor and requires Apple to adopt an antitrust compliance program.
Earlier this year, Judge Cote held that Apple violated Section 1 of the Sherman Act by conspiring with book publishers to raise e-book prices and eliminate price competition between e-book retailers, and yesterday entered the injunction to prevent Apple from incurring further antitrust violations.
The prohibitions listed in the injunction include restrictions on Apple's ability to:
- Enter into or enforce retail price Most Favored Nation clauses in e-book sale agreements.
- Enter into or maintain retail price agreements with five e-book publishers for specified periods of time, including:
- Hachette Book Group, Inc., for 24 months;
- HarperCollins Publishers L.L.C., for 30 months;
- Simon & Schuster, Inc., for 36 months;
- Penguin Group (USA), Inc. and its affiliates, for 42 months; and
- Holtzbrinck Publishers, LLC d/b/a Macmillan and Verlagsgruppe Georg von Holtzbrinck GmbH, for 48 months.
- Retaliate against or punish e-book publishers for refusing to enter into agreements with Apple in connection with the sale of e-books.
- Communicate any of its contractual terms with e-book publishers to other e-book publishers.
- Enter into or maintain any agreements with e-book publishers intended to fix or increase e-book prices.
Judge Cote also required Apple to appoint, within 30 days, an internal antitrust compliance officer to:
- Oversee Apple's compliance efforts.
- Conduct an annual antitrust compliance audit.
Finally, the court ordered an external compliance monitor which it will appoint for a period of two years to:
- Supervise and review Apple's antitrust compliance program and make necessary recommendations and reports to Apple and the government.
- Work jointly with the antitrust compliance officer to conduct the annual antitrust compliance audit.
Apple will be responsible for the costs and expenses in connection with the external compliance monitor and any employees he or she needs to perform the court ordered role.
The order will go into effect 30 days from September 5, 2013 and will expire five years from the effective date unless extended by the court by one or more one-year increments. Apple said that it intends to appeal the injunction.
For more information on the Apple e-books case, see Legal Update, Court Rules Against Apple in E-Books Case.
Practical Implications
Along with the AU Optronics case, this is the second time in less than a year that the DOJ has requested a court to appoint an external compliance monitor in a litigated price-fixing case (US v. AU Optronics, No. CR-09-0110 SI (N.D. Cal. Sept. 20, 2012)). This growing trend showcases the DOJ's aggressive stance towards companies that choose to litigate price-fixing charges instead of entering guilty pleas.