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DOJ Defends Settlement Against ‘Ruinous Competition’ Charges

“Railroads, publishers, lawyers, construction engineers, health care providers, and oil companies are just some of the voices that have raised cries against ‘ruinous competition’ over the decades,” wrote the  Department of Justice Antitrust Division lawyers in a filing that argues that Apple and three publishers should come to a settlement over its eBook pricing case.

Here is an excerpt from the court filing archived by PaidContent (PDF version): “The conspirators eliminated the ‘wretched $9.99 price’ that so attracted the reading public and so infuriated publishers, and made sure that Apple would not have to contend with what it viewed as senseless competition as it entered the e-book market. Now those conspirators that have not settled with the United States seek to upset the settlements that have been reached, and thereby delay the restoration of competition. Those efforts have no basis in law, and this Court should reject them.”

Last week, Apple said that it will not settle the case and hopes to go to trial, claiming , “Once its existing contracts are terminated, Apple could not simply reinstate them after prevailing at trial. The Court’s decision would be irreversible.”

The court has responded to this claim by saying, “In suggesting to the Court that the proposed decree will cause Apple to forfeit valuable contract rights, Apple carefully avoids describing exactly what those rights are. Each settling defendant’s Apple Agency Agreement essentially is a month-to-month contract that is explicitly terminable by the publisher on thirty days’ notice.” The brief goes on to say that Apple’s contracts with HarperCollins Publishers and Simon & Schuster say that they “may be terminated ‘by either Party’ for ‘any or no reason,’” and that Apple’s contract with the Hachette Book Group “may be terminated ‘by either Party’ upon ‘written notice of not less than thirty days.’”

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