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Apple broke antitrust laws

Judge rules company conspired to raise e-book prices

– Apple Inc. broke antitrust laws and conspired with publishers to raise electronic book prices significantly in spring 2010, a federal judge ruled Wednesday, citing “compelling evidence” from the words of the late Steve Jobs.

U.S. District Judge Denise Cote said Apple knew that no publisher could risk acting alone to try to eliminate Amazon.com’s $9.99 price for the most popular e-books, so it “created a mechanism and environment that enabled them to act together in a matter of weeks to eliminate all retail price competition for their e-books.”

“Apple seized the moment and brilliantly played its hand,” Cote said. She wrote that Apple’s deals with publishers caused some e-book prices to rise 50 percent or more virtually overnight.

The Manhattan jurist, who did not determine damages, said the evidence was “overwhelming that Apple knew of the unlawful aims of the conspiracy and joined the conspiracy with the specific intent to help it succeed.”

Her decision was not surprising, since she had urged Apple to settle before trial and said the company had only a slim chance of winning. Government officials and industry experts have said e-book prices have declined and stabilized since rising after Apple entered the market.

Cote identified five trial witnesses as “noteworthy for their lack of credibility,” including Eddy Cue, a top Apple executive described as Jobs’ right-hand man.

Apple spokesman Tom Neumayr said the Cupertino, Calif.-based company will appeal.

“Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations,” he said. “We’ve done nothing wrong.”

Assistant Attorney General Bill Baer called the ruling “a victory for millions of consumers who choose to read books electronically.”

He said the judge agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers.

“Through today’s court decision and previous settlements with five major publishers, consumers are again benefiting from retail price competition and paying less for their e-books,” he said.

The publishers that had settled were Hachette, HarperCollins, Simon & Schuster, Holtzbrinck Publishers, doing business as Macmillan, and The Penguin Publishing Co. Ltd., doing business as Penguin Group.

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