DoJ Proposes Punishments for Apple

Apple was found guilty in federal court of conspiring to fix e-book prices last month, and now the victorious Department of Justice has outlined a set of proposed rules “intended to halt Apple’s anticompetitive conduct, restore lost competition and prevent a recurrence of the illegal activities.”

The proposed restrictions would require Apple to cancel existing contracts with Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster; would prevent them from entering into new e-book distribution contracts for five years; prohibit Apple  “from again serving as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms”; and restrict Apple from “entering into agreements with suppliers of e-books, music, movies, television shows or other content that are likely to increase the prices at which Apple’s competitor retailers may sell that content.”

Apple would also have to make it possible for “other e-book retailers like Amazon and Barnes & Noble to provide links from their e-book apps to their e-bookstores, allowing consumers who purchase and read e-books on their iPads and iPhones easily to compare Apple’s prices with those of its competitors.” The DoJ also wants the court to “appoint an external monitor to ensure that Apple’s internal antitrust compliance policies are sufficient to catch anticompetitive activities before they result in harm to consumers.” Apple would have to pay the monitor’s salary.  

Apple senior vice president Eddy Cue called the proposals a “draconian and punitive intrusion into Apple’s business, wildly out of proportion to any ajudicated wrongdoing or potential harm.”

The court will hold a hearing on August 9, 2013 to consider the proposal.

The DoJ’s full proposal may be read online here.