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Court Upholds $450M Apple E-Books Settlement

The 2nd Circuit U.S. Court of Appeals upheld the $450 million settlement in a case charging Apple with fixing prices on e-books. The settlement had been challenged by one e-books purchaser, who questioned the fairness, reasonableness, and adequacy of the class action settlement.

Pending Apple's appeal to the Supreme Court, the company will be forced to reimburse consumers for playing a "central role" in a price-fixing scheme designed to undercut their major competitor, Amazon. The settlement calls for Apple to pay $400 million to compensate consumers and another $50 million in legal fees.

If the Price Ain't Broke...

In July 2013, U.S. District Judge Denise Cote ruled that Apple and five e-book publishers agreed to cease competing over retail prices, keep e-book prices artificially high, and gave Apple a 30 percent kickback on eBook sales. This violated federal antitrust laws, specifically Section 1 of the Sherman Act, which declares "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations is hereby declared to be illegal."

Judge Cote urged the parties to settle, and in November 2014 approved the settlement between Apple, consumers, 33 state attorneys general, and the five publishers: 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.

Ruling and Review

The case has followed a complicated road just to get here, and its not done yet. Judge Cote heard all the evidence and ruled without a jury that Apple violated antitrust laws. Apple appealed, and the 2nd Circuit later upheld that ruling. Then Cote approved the settlement, and e-books purchaser John Bradley appealed the settlement. The 2nd Circuit upheld that ruling as well.

Now Apple takes its fight regarding the antitrust charges to the Supreme Court. Whether the Court will hear the case remains to be seen. If they win that appeal, Apple may owe nothing.

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