Apple to pay $450 million as U.S. Supreme Court rejects e-books price-fixing appeal

(By Lawrence Hurley, Reuters) — The U.S. Supreme Court on Monday declined to hear Apple Inc’s challenge to an appellate court decision that it conspired with five publishers to increase e-book prices, meaning it will have to pay $450 million as part of a settlement.

The court’s decision not to hear the case leaves in place a June 2015 ruling by the New York-based 2nd U.S. Circuit Court of Appeals that favored the U.S. Department of Justice and found Apple liable for engaging in a conspiracy that violated federal antitrust laws.

Apple, in its petition asking the high court to hear the case, said the June decision by the 2nd U.S. Circuit Court of Appeals in New York upholding a judge’s ruling that Apple had conspired with the publishers contradicted Supreme Court precedent and would “chill innovation and risk-taking.”

The 2nd Circuit’s ruling followed a 2013 decision by U.S. District Judge Denise Cote after a non-jury trial that Apple played a “central role” in a conspiracy with publishers to eliminate retail price competition and raise e-book prices.

The Justice Department said the scheme caused some e-book prices to rise to $12.99 or $14.99 from the $9.99 price previously charged by market leader Amazon.com Inc.

“Apple’s liability for knowingly conspiring with book publishers to raise the prices of e-books is settled once and for all,” said Bill Baer, head of the U.S. Justice Department’s antitrust division. Baer called the price-fixing conspiracy “cynical misconduct.”

Publishers that the Justice Department said conspired with Apple include Lagardere SCA’s Hachette Book Group Inc, News Corp’s HarperCollins Publishers LLC, Penguin Group Inc, CBS Corp’s Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan.

On Feb. 17, the appeals court in New York upheld the proposed settlement, which had been challenged by an e-books purchaser.

Apple did not immediately respond to requests for comment.

The Justice Department accused Apple of colluding with the five publishers as the Silicon Valley giant was launching its iPad in early 2010 and was seeking to break up Amazon.com’s low-cost dominance in the digital book market.

The case is Apple v. United States, U.S. Supreme Court, No. 15-565.

(Reporting by Lawrence Hurley; Additional reporting by Diane Bartz; Editing by Will Dunham)