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Consumer watchdog says Apple did 'considerable harm' with ebook pricing, supports DOJ ruling

Consumer watchdog says Apple did 'considerable harm' with ebook pricing, supports DOJ ruling

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Eddy Cue, the Apple exec accused of orchestrating the price fixing (right), leaves court.

The Consumer Federation of America (CFA) said in papers filed in federal court that Apple caused considerable "consumer harm" when it conspired to fix ebook prices. Because of that the group supports the government's plan to penalize the company. US District Judge Denise Cote is scheduled to hear arguments today in Manhattan about the proposed penalties.

In July, Cote found Apple liable for antitrust violations involving its role in raising ebook prices soon after launching the iBookstore in 2010. Last year, the US Department of Justice accused Apple and five of the top six book publishers of plotting to raise and fix ebook prices partly to seize away Amazon's ability to discount, an important competitive advantage for the online store.

"Some of the publishers have already settled for over $200 million." After the court found Apple liable, the DOJ and 33 state attorneys general asked the court for "remedies" which are really penalties against Apple. Among them are the requirements that Apple be banned from signing fixed-pricing agreements with ebook publishers for five years, and it must allow competing ebook merchants to link directly to their own stores within their iOS apps.

The CFA, formed in 1968, filed an amicus brief and wrote that the nature of Apple's conduct justifies the penalties. "Some of the publishers have already settled for over $200 million, some of the highest settlements in history," David Balto, the CFA's lawyer, wrote in his brief. "The debut of Apple's iBookstore led to across-the-board increases in e-book prices from $9.99 to $12.99 and as much as $14.99."

Balto also warned the court about letting Apple off with a wrist slap. "Anything less than a comprehensive remedy could signal that antitrust compliance can be an afterthought," Balto wrote, "and that antitrust penalties are merely a cost of doing business."

Apple opposes the DOJ's plan and has called it "draconian." The five publishers accused of participating in the price-fixing scheme with Apple, all of which settled out of court, earlier filed their own brief and claimed the DOJ penalties would harm the entire publishing industry.

It's possible, though unlikely, that Judge Cote could make a decision today after hearing arguments. With this case, she has typically taken several weeks to issue a ruling.