On Monday, the United States Court of Appeals for the Second Circuit heard oral argument in Apple’s appeal in the e-book price-fixing lawsuit brought by the Department of Justice. This appeal follows an adverse decision from June 2013, in which the district court determined that Apple had conspired with five book publishers to raise prices on e-books in violation of the antitrust laws.
At oral argument, the Second Circuit seemed particularly interested in whether the district court had erred in applying the per se standard to this case. Apple argued that, instead of a per se analysis, the rule of reason should apply because the case concerned vertical business arrangements between Apple and the book publishers. The court also probed the relevance of Amazon’s monopoly in the market for e-books in assessing the legality of Apple’s conduct, asking how Apple’s conduct could be condemned under the per serule if Apple and the publishers were trying to break down Amazon’s monopoly. Additionally, the court inquired whether the case should be remanded if the panel determined that the per se rule had been incorrectly applied. Apple’s counsel urged the court to reverse instead of remanding the case.
As we reported previously, under the settlement agreement that the district court preliminarily approved earlier this year, the Second Circuit’s ruling will determine Apple’s liability. If the Second Circuit affirms the district court’s decision, Apple will pay $400 million to eligible consumers and $50 million in attorneys’ fees. If the Second Circuit vacates the decision or reverses and remands for reconsideration or retrial on the merits, Apple will pay $50 million to consumers and $20 million in attorneys’ fees. If the Second Circuit reverses the liability finding, Apple will pay nothing.