Rare Book Monthly

Articles - January - 2016 Issue

Apple is Going to the Supreme Court to Argue They Did Not Fix E-Book Prices

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All the way to the Supreme Court.

In a strange continuation of the long-running Department of Justice antitrust claim against Apple and five book publishers for e-book price fixing, Apple has filed an appeal all the way to the Supreme Court. The publishers long ago settled their cases. Actually, Apple did too. It had agreed upon a substantial payment to purchasers of e-books if the Appeals Court decision went against them. It did. Apple appealed to the Supreme Court anyway. It will not reduce their obligations to e-book buyers if they win. That part is over. They are only fighting for the principle now. Only a company like Apple, with its hundreds of billions of dollars in the bank, can take on the expenses of a Supreme Court case just for the principle.

 

The Department of Justice sued Apple and book publishers Hachette, HarperCollins, MacMillan, Penguin, and Simon & Schuster 3 ½ years ago for a conspiracy to fix prices. Briefly, Apple wanted to begin selling e-books to be used with its new iPad tablets, but did not want to compete on price against Amazon. Amazon was willing to sell books for little if any profit to obtain market share. The strategy was very successful. They dominated the e-book market.

 

Apple, however, wanted to make a profit. So, it informed the publishers that they would only sell their e-books if the publishers set retail prices at a level higher than those for which Amazon was selling. The exact nature of those discussions is in dispute, but the lower court determined that Apple was the "ringleader" in the process that resulted in more vendors selling e-books to the public, but at higher prices. The lower court determined this was an antitrust violation, and the Appeals Court more recently affirmed that opinion.

 

After the lower court ruled against Apple, but before the Appeals Court affirmed that ruling, Apple made a deal with representatives of the e-book buyers. Apple agreed to pay them $450 million if the Appeals Court ruled against them. If the Appeals Court ruled in their favor, Apple would pay nothing. Apple lost in the Appeals Court so they owe $450 million. That won't be undone, regardless of how the Supreme Court rules. It is now a battle over principle, or reputation from Apple's standpoint. My guess is no one else cares. Those who believe Apple is a soulless, dominating behemoth will not feel any different if Apple wins in the Supreme Court. Those who think the same of Amazon will likely continue to approve of Apple's behavior if the Appeals Court decision is upheld. A change in the court judgment now may have an impact on the thinking of legal scholars, but probably no one else.

 

Apple's appeal is based on distinctions between horizontal and vertical relationships, per se rules and a "rule of reason." Here is a brief guidebook. Horizontal relationships are between equals, competitors. Each of the five publishers was in a horizontal relationship with the other four competitors. Vertical relationship are between entities on different levels. Apple was a customer, the publishers vendors. That's a vertical relationship.

 

A per se ruling is where the basic activity is such that guilt is presumed. If horizontal entities, such as the publishers, get together, and at the end, they all agree to raise prices, a court will find per se they conspired to fix prices. They won't acquit on the basis they don't have testimony of what exactly transpired in that backroom. They know darn well.

 

However, a previous Supreme Court ruling said that, at least in some cases, a "rule of reason" needs to be applied for discussions between vertical players. It's not so obvious that a price-fixing conspiracy is taking place when non-competitors' discussions, such as those between Apple and the publishers, take place. This is true even if the various horizontal parties (the publishers) together raise prices. There may be a per se conclusion of a price-fixing conspiracy among the publishers, but not one between Apple and the publishers.

 

Two things happened as a result of whatever occurred here. One can be viewed as anti-competitive, the other as pro-competition. All of the publishers raised their prices to the same level. That sounds anti-competitive. On the other hand, more companies began selling e-books. Amazon's market share dropped from roughly 90% to 60%. That sounds pro-competitive. I think Apple may have a shot at this one, even though they are 0-2 so far. The Supreme Court sometimes sees things differently than lower courts that are dealing more with the personal side, witnesses and all, than simply legal arguments. Apple may yet win the case, but the e-book buyers, beneficiaries of the earlier agreed upon settlement, have already won their money.

Rare Book Monthly

  • <center> <b>Leslie Hindman Auctioneers<br>Fine Books and Manuscripts Including Americana<br>November 6, 2019</b>
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> RATZER, Bernard. <i>Plan of the City of New York in North America, surveyed in the years 1766 & 1767.</i> London: Jefferys and Faden, “Jan.y” 12, 1776. $80,000 to $120,000
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> [KELMSCOTT PRESS]. COCKERELL, Sydney C. <i>Some German Woodcuts of the Fifteenth Century.</i> Hammersmith: The Kelmscott Press, 1897 [issued 1898]. $20,000 to $30,000
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> [GOLDEN COCKEREL PRESS]. KEATS, John. <i>Lamia, Isabella, the Eve of Saint Agnes and Other Poems.</i> Waltham Saint Lawrence, Berkshire: The Golden Cockerel Press, 1928. $6,000 to $8,000
    <center> <b>Leslie Hindman Auctioneers<br>Fine Books and Manuscripts Including Americana<br>November 6, 2019</b>
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> [GRANT, Ulysses S.— GRANT, Julia, First Lady]. Carved Applewood and 18-karat Gold Jewelry Suite, Browne & Spaulding, Jewelers, New York City, 1865. $20,000 to $30,000
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> [LINCOLN ASSASSINATION]. GARDNER, Alexander. <i>Incidents of the War |Sic Semper Sicariis</i> [caption title]. Washington, D. C.: Philip & Solomons, 1865. $5,000 to $7,000
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> A COMPLETE COLLECTION of 115 titles published in R. R. Donnelley's Lakeside Classics series. Chicago, 1903-2017. COMPLETE RUN OF THE LONGEST-RUNNING CONTINUOUS SERIES OF BOOKS IN THE WORLD. $5,000 to $7,000
    <center> <b>Leslie Hindman Auctioneers<br>Fine Books and Manuscripts Including Americana<br>November 6, 2019</b>
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> GLEIZES, Albert. METZINGER, Jean. <i>Du Cubisme.</i> Paris, 1947. LIMITED EDITION, number 19 of 20 copies on papier d'Auvergne. $3,000 to $4,000
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> [THE LITTLE REVIEW]. ANDERSON, Margaret, ed. POUND, Ezra, ed. HEAP, Jane, ed. <i>The Little Review.</i> Vol. I, No. 1 through Vol. XII, No. 2. 1914-1929. $3,000 to $4,000
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> [MOUNTENEY, Leonard, binder]. LOUŸS, Pierre. <i>Songs of Bilitis.</i> Chicago: Argus Books, 1931. $2,000 to $3,000
    <b>Leslie Hindman Auctioneers, Nov. 6:</b> [HANCOCK, John]. Partly-printed U.S. Loan-Office Transfer Certificate issued on behalf of Hancock. Sgn’d on recto by William Imlay, as Commissioner of Loans of Connecticut. 28 February 1793. $2,000 to $3,000
  • <b>Bonhams, Oct. 23:</b> SMITH, CHRISTOPHER WEBB. 1793-1871. <i>Indian Ornithology.</i> [Patna, India]: 1828. $50,000 to $80,000.
    <b>Bonhams, Oct. 23:</b> DUPRÉ, LOUIS. 1789-1837. <i>Voyage à Athènes et à Constantinople, ou Collection de portraits, vues et costumes grecs et ottomans.</i> Paris: Dondey-Dupré, 1825. $60,000 to $90,000.
    <b>Bonhams, Oct. 23:</b> ADAMS, JOHN. Autograph Letter Signed ("J Adams"), [to Dr. Perkins?] while recovering from his small pox inoculation, [late-April, 1764]. $30,000 to $50,000.
    <b>Bonhams, Oct. 23:</b> AUSTEN, JANE. Autograph Letter Signed ("J. Austen"), to her sister Cassandra, 4 pp, "Thursday – after dinner," [September 16, 1813,] Henrietta St. $80,000 to $120,000.
    <b>Bonhams, Oct. 23:</b> AUDUBON, JOHN JAMES. 1785-1851. <i>The Birds of America, from Drawings Made in the United States and Their Territories.</i> New York & Philadelphia: J.J. Audubon & J.B. Chevalier, 1840-1844. $20,000 to $30,000.
    <b>Bonhams, Oct. 23:</b> DODWELL, EDWARD. 1767-1832. <i>Views in Greece.</i> London: Rodwell and Martin, 1821. $20,000 to $30,000.
    <b>Bonhams, Oct. 23:</b> JAMES, JESSE. Autograph Letter Signed ("Jesse W. James"), to Mr. Flood demanding Flood retract spurious accusations, 3 pp, June 5, 1875. $200,000 to $300,000.
    <b>Bonhams, Oct. 23:</b> DE CORDOBA, JACOB. <i>Map of the State of Texas.</i> New York, 1866. $15,000 to $20,000
    <b>Bonhams, Oct. 23:</b> ARNOLD, BENEDICT. Autograph bookseller's receipt for Dr. John Dickinson, Signed ("B. Arnold"), February 1767. $3,000 to $5,000.
    <b>Bonhams, Oct. 23:</b> EINSTEIN, ALBERT. 4 Typed Letters Signed ("A Einstein") to Cleveland E. Dodge offering early reports on the meetings of the Emergency Committee of Atomic Scientists. $10,000 to $15,000.
    <b>Bonhams, Oct. 23:</b> EISENHOWER, DWIGHT D. Typed Letter Signed ("Dwight D. Eisenhower") to General Henri Giraud written from a secret bunker in Gibraltar on the eve of Operation Torch, November 4 [but 6], 1942. $10,000 to $15,000.
    <b>Bonhams, Oct. 23:</b> Early Broadside Printing of the GADSDEN PURCHASE, Puebla, August 16, 1854. $2,000 to $3,000.
    <b>Bonhams, Oct. 23:</b> ALLEN, ETHAN. Autograph Letter Signed to Crevecouer during the Constitutional Debates in Congress, 2 pp, August 29, 1787. $30,000 to $50,000.
  • <center><b>Leslie Hindman Auctioneers<br>Library of a Midwestern Collector<br>November 5, 2019</b>
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> DARWIN, Charles. <i>On the Origin of Species.</i> London John Murray, 1859. FIRST EDITION. THE VERY FINE MELLON-GARDEN COPY. $120,000 to $180,000
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> ECKERT, J. P, H. H. GOLDSTINE, and J. G. BRAINERD. <i>Description of the ENIAC and comments on electronic digital computing machines.</i> N.p., 1945. FIRST EDITION, INSCRIBED BY GOLDSTINE. $5,000 to $7,000
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> EUCLID. <i>Elementa geometriae.</i> Translated from the Arabic by Adelard of Bath. Venice: Erhard Ratdolt, 25 May 1482. FIRST EDITION. $60,000 to $80,000
    <center><b>Leslie Hindman Auctioneers<br>Library of a Midwestern Collector<br>November 5, 2019</b>
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> [HAMILTON, Alexander, James MADISON and John JAY]. <i>The Federalist: A Collection of Essays…</i> New York: John and Andrew M'Lean, 1788. FIRST EDITION. $60,000 to $80,000
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> GALILEI, Galileo. <i>Dialogo...Dove ne i congressi di quattro giornate si discorre sopra i due massimi sistemi del mondo Tolemaico, e Copernicano.</i> Florence, 1632. FIRST EDITION. $30,000 to $40,000
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> JOYCE, James. <i>Ulysses.</i> Paris: Shakespeare and Company, 1922. FIRST EDITION, ONE OF 100 COPIES SIGNED BY JOYCE. $120,000 to $180,000
    <center><b>Leslie Hindman Auctioneers<br>Library of a Midwestern Collector<br>November 5, 2019</b>
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> KEYNES, John Maynard. <i>The General Theory of Employment Interest and Money.</i> London: Macmillan, 1936. FIRST EDITION. $5,000 to $7,000
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> NEWTON, Isaac, Sir. <i>Philosophiae naturalis principia mathematica.</i> London: Joseph Streater for the Royal Society, 1687. FIRST EDITION. $150,000 to $250,000
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> ROWLING, J. K. <i>Harry Potter and the Philosopher's Stone.</i> London: Bloomsbury, 1997. FIRST EDITION, SIGNED BY ROWLING. $80,000 to $120,000
    <b>Leslie Hindman Auctioneers, Nov. 5:</b> SMITH, Adam. <i>An Inquiry into the Nature and Causes of the Wealth of Nations.</i> London: for W. Strahan and T. Cadell, 1776. FIRST EDITION. $70,000 to $90,000
  • <b>Swann Auction Galleries Oct 24:</b> Sir Isaac Newton, <i>Opticks,</i> first edition, first issue, London, 1704. $15,000 to $25,000.
    <b>Swann Auction Galleries Oct 24:</b> Johannes Jacobus Canis, <i>De modo studendi in utroque iure,</i> first edition, Padua, 1476. $6,000 to $9,000.
    <b>Swann Auction Galleries Oct 24:</b> Pope Clemens V, <i>Constitutiones,</i> Nuremberg, 1482. $2,500 to $3,500.
    <b>Swann Auction Galleries Oct 24:</b> Nicolaus Panormitanus de Tudeschis, <i>Lectura super V libris Decretalium,</i> Basel, 1480-81. $5,000 to $7,000.
    <b>Swann Auction Galleries Oct 24:</b> Michael Faraday, <i>Experimental Researches in Electricity,</i> complete set, first editions, London, 1832-56. $3,000 to $4,000.
    <b>Swann Auction Galleries Oct 24:</b> William Gilbert, <i>Tractatus sive physiologia nova de magnete,</i> Sedini, 1628. $3,000 to $5,000.
    <b>Swann Auction Galleries Oct 24:</b> John Bulwer, <i>Philocophus,</i> first edition of the first book in English on the deaf, London, 1648. $1,000 to $2,000.
    <b>Swann Auction Galleries Oct 24:</b> James Cook, complete set, 9 volumes, London, 1773-84. $10,000 to $15,000.
    <b>Swann Auction Galleries Oct 24:</b> Nicolaus Bertrand, <i>Opus de Tholosano[rum] Gestis ab Urbe Condita,</i> with the earliest known view of the city of Toulouse, 1515. $2,000 to $3,000.

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