WASHINGTON, D.C. – The U.S. Supreme Court on Monday rejected to hear Apple Inc.’s challenge to an appellate court decision that the Cupertino firm took part in a conspiracy with five publishers to raise e-book prices. As part of a settlement, Apple is set to pay $450 million, Reuters reported.

After the court declined to hear the case, a June 2015 ruling by the 2nd U.S. Circuit Court of Appeals in New York is left in place. It found Apple responsible for being involved in a conspiracy that broke federal antitrust rules.

When asking the Supreme Court to hear the case, Apple said the court would “chill innovation and risk-taking” by dictating in June that the firm had conspired with the five publishers. The company also said the decision contradicted high court precedent.

Supreme Court declines to hear Apple e-books price-fixing case. Photo credit: Poynter
Supreme Court declines to hear Apple e-books price-fixing case. Photo credit: Poynter

The ruling by the 2nd Circuit followed a U.S. District Judge Denise Cote’s 2013 decision that Apple had played a “central role” in a conspiracy with publishers to increase e-book prices.

The Justice Department said the move caused certain e-book prices to augment from $9.99 to $12.99 or $14.99. The initial price used to be charged by Amazon.com Inc. The department said the list of publishers that conspired with Apple included Lagardere SCA’s Hachette Book Group Inc, News Corp’s HarperCollins Publishers LLC, Penguin Group Inc, CBS Corp’s Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan.

“Apple’s liability for knowingly conspiring with book publishers to raise the prices of e-books is settled once and for all,” stated Bill Baer, head of the U.S. Justice Department’s antitrust division, as reported by Reuters.

The appeals court in New York upheld the proposed settlement on Feb. 17. An e-books buyer had challenged it.

The fierce competition against Amazon

There was concern among the publishers that Amazon was pushing down e-books prices while Apple was trying to make its new iPad a hit and was looking to break up its rival’s low-cost dominance in the market of digital books.

Apple and the publishers reached an agreement that involved a 30 percent commission for the company and publishers could set the prices for their respective e-books. This “agency pricing” tactic prevents discounting. The arrangement also implied that the publishers would charge all products the same amount, a move that forced Amazon to raise its prices. E-books that had cost $9.99 all of a sudden cost $12.99 or $14.99.

Amazon announced in a statement it would distribute the court-mandated settlement funds to Kindle users as soon as the company was instructed to take further action. Apple has not released a response to the court’s decision.

The case is Apple v. United States, U.S. Supreme Court, No. 15-565.

Source: Reuters