Judge Considers Limits on Apple's Future E-Book Deals

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A federal judge proposed on Friday that Apple be required to negotiate future contracts with major publishers separately and at defined intervals as part of its punishment for illegally conspiring to raise the price of e-books.

In a sometimes testy hearing in United States District Court in Lower Manhattan, Judge Denise L. Cote said that she was considering a plan in which Apple would negotiate contracts with publishers in a staggered fashion -- possibly six to eight months apart -- to prevent them from engaging in another price-fixing conspiracy.

Judge Cote ruled in July that Apple colluded with publishers to raise the price of e-books before the introduction of its iPad in 2010. Those charges were brought against Apple and five major publishers by the Justice Department in 2012. The publishers all settled, but Apple held out and went to trial.

The judge's proposal was a scaled-back version of the guidelines put forth by the government last week, when it suggested that Apple be forced to end its agreements with the five settling publishers and avoid entering similar agreements with producers of movies, TV and music. Apple responded by calling the proposal a "draconian and punitive intrusion" into its business.

The publishers who settled also objected to the Justice Department's proposed remedy, saying that it would fundamentally change their existing settlements.

In court on Friday, Judge Cote said that she wanted an injunction to be tailored so that it would encourage innovation in a rapidly changing e-book business and yet prevent collusion on price in the future.

"I have no desire to regulate the App Store," she said.

But Judge Cote also slammed the publishers for lacking "contrition" and said that she feared future collusion in the e-book market. Although the publishers eventually agreed to settlements, none of them admitted wrongdoing.

Judge Cote said that the publishers had played "a rough and tumble game" and engaged in "blatant price fixing."

"None of the publisher defendants have expressed any remorse," she said. "They are, in a word, unrepentant."

Lawyers for Apple and the government said in court that they would meet in the next week and discuss the judge's proposal. Another hearing is expected later this month.

Apple and the Justice Department declined to comment.

Hachette Book Group, HarperCollins and Simon & Schuster settled in April 2012; Penguin Group USA and Macmillan settled later. Penguin has since merged with Random House, which was not named in the lawsuit.

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This article originally appeared in The New York Times.


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