NY Judge Orders Apple to Revamp e-Book Contracts

The U.S. District Court for the Southern District of New York today ordered Apple (NASDAQ: AAPL  ) to change how it handles its e-book business to address anticompetition matters. The court will also appoint an independent monitor to keep an eye on things.

The order comes after federal judge Denise Cote ruled in July that Apple conspired with several major publishers to fix e-book prices, thus unjustly swaying the industry in Apple's (and the publishers') favor.

Apple spokesman Tom Neumayr said the company will appeal the latest order.

"Apple did not conspire to fix e-book pricing," he said. "The iBookstore gave customers more choice and injected much needed innovation and competition into the market. Apple will pursue an appeal of the injunction."

According to a Department of Justice press release, under the terms of the new court order, Apple must update its existing contract agreements with the publishing companies with which it conspired, erasing clauses that resulted in higher e-book pricing. The publishing houses in question are HarperCollins Publishers LLC, Holtzbrinck Publishers LLC (the company behind Penguin Group, Macmillan, and Simon & Schuster), and Hachette Book Group.

According to the Department of Justice, the court said "Apple is prohibited from serving as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms. Apple is also prohibited from entering into agreements with e-books publishers that are likely to increase the prices at which Apple’s competitor retailers may sell that content."

The court will also appoint a monitor, with a salary paid by Apple, who will make sure the company's policies are enough to prevent similar anticompetitive events from happening in the future.

"By appointing an external monitor to ensure future compliance with the antitrust laws," said Assistant Attorney General Bill Baer, of the DOJ's Antitrust Division, in a statement, "the court has helped protect consumers from further misconduct by Apple. The court's ruling reinforces the victory the department has won for consumers."

The judge's order will remain in place for contracts between Apple and the various publishers until they begin expiring at six-month intervals in two years.

-- Material from The Associated Press was used in this report.


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