In an opposition brief filed on December 23, the U.S. Department of Justice urged the Supreme Court not to hear Apple’s appeal in the long-running e-book price-fixing case. In the 32-page filing, DOJ attorneys portray the case as open-and-shut, and suggest that Apple’s appeal is based on a fundamental misrepresentation of the facts.
“The verdict against [Apple] rests on the unexceptionable proposition that [Apple] was not entitled to accomplish its entry into a market by organizing a horizontal price-fixing conspiracy among that market’s suppliers,” DOJ attorneys argue. “[Apple] was not a hapless actor that unwittingly became enmeshed with some form of alleged collusion, but in fact orchestrated the publishers’ conspiracy, and actively relied on their collusion to achieve its business ends.”
Concluding that there is no “obvious and exceptional showing of error” at the lower courts, nor a conflict with Supreme Court precedent or any other court of appeals decision, DOJ attorneys argue that no further review is warranted.
IIn their appeal, Apple attorneys claim that the lower courts erred in finding Apple liable for a “per se” case of price-fixing. According to Apple, case law dictates that Apple’s “vertical” relationship to the publishers requires that its conduct must instead be considered under the more expansive “rule of reason” framework, which Apple contends would exonerate their conduct as pro-competitive. Seven amicus briefs filed in December support Apple's appeal.
DOJ attorneys, however, say Apple’s appeal relies on “a sanitized version” of the facts. The case is not about Apple’s vertical contracts, the DOJ brief stresses, but rather “the horizontal agreement that [Apple] organized among the [publishers] to raise e-book prices,” which DOJ attorneys call “the archetypical example” of a per se unlawful restraint on trade. “Apple does not appear to dispute that the publishers engaged in a horizontal price-fixing conspiracy that was properly subject to per se condemnation,” DOJ attorneys argue. “Consistent with the text of the Sherman Act and with general conspiracy principles, this Court’s decisions have long made clear that, when a horizontal conspiracy is subject to per se condemnation, a vertically-related firm that joins the conspiracy is liable to the same extent as its co-conspirators.”
DOJ attorneys also contested the notion that Apple’s entry was a necessary, pro-competitive move to gain entry into a new market where competition had been foreclosed by a single dominant player, Amazon. “The facts that the conspiracy occurred in a nascent market and that the conspirators relied in part on a novel combination of contract terms to effectuate their agreement do not alter the fundamental nature of their conduct,” the brief states. “And this Court has squarely rejected the argument that the per se rule must be re-justified for every industry or for every new mechanism for fixing prices.”
Apple can now file a reply brief if it so chooses. The court will then decide whether or not to hear the case. If it rejects the appeal, Apple's liability in the case will be considered final under the terms of a settlement reached with the plaintiff states and consumer class in 2014, and will trigger $400 million in consumer refunds.
