In June 2013, after a three-week bench trial, Judge Denise Cote of the U.S. District Court for the Southern District of New York held that Apple Inc. committed price fixing in violation of Section 1 of the Sherman Act when it agreed with five book publishers to raise the retail price of e-books. The case was brought by the U.S. Department of Justice and 33 states, and was subsequently consolidated with several class-action lawsuits. With the trial on damages scheduled for May 2014, Apple’s exposure could reach into the hundreds of millions of dollars, in addition to ongoing oversight by a government-appointed monitor. The publishers settled before the trial for approximately $170 million.
Regardless of Apple’s prospects for success on appeal, the case offers several lessons regarding current antitrust enforcement and best practices for in-house counsel. First, the significant weight that the court and DOJ put on Apple’s documents reinforces the importance of an effective document discipline program. Second, the case exemplifies the antitrust agencies’ growing appetite for investigating and challenging conduct in nascent and dynamic industries. Third, even an agreement that uses routine language or terms can raise antitrust concerns if it will increase prices or reduce output. Fourth, companies subject to antitrust investigations should be prepared for related class action litigation, which may commence well before the conclusion of the investigation.
