Apple being sued for price fixing

[Skull One]

I still disagree. Apple did not set the price. They asked for the price they wanted and the publishers set it. It is two different acts. I could ask you to rob a bank but if I don't go with you at worst I am an accessory.

Ok, you may do that then. But the DOJ filed the lawsuit and applied the same laws to all of them. Apple was directly accused of price fixing with collusion. It doesn't get much clear cut than that.

 

[beesknees]

Ok, you may do that then. But the DOJ filed the lawsuit and applied the same laws to all of them. Apple was directly accused of price fixing with collusion. It doesn't get much clear cut than that.

Filing a lawsuit just gives them the right to dig and see if there was a crime committed.

 

[Skull One]

Filing a lawsuit just gives them the right to dig and see if there was a crime committed.

DOJ doesn't file this type of lawsuit until the evidence is already established. That is a precedent that goes back at least 60 years.

 

[Ziggie]

DOJ doesn't file this type of lawsuit until the evidence is already established. That is a precedent that goes back at least 60 years.

Agreed. DOJ files suits that are, first, relevant or important to a large segment of the populace, and, second, after they have done a ridiculous amount of background work to convince themselves they have a 95% + chance of prevailing. They don't file frivolous suits.

 

[thewitt]

My lawyer - with 30 years in the publishing business - says this is total BS, will fall apart in the initial stages and will never end up in front of a judge.

No laws have been broken.

This is a voluntary sales agreement being offered openly and without prejudice. If the publishers wish to sell thorough the iBook Store they must agree to sell for no lower prices anywhere else.

Not price fixing. All voluntary.

There are plenty of options for the sale of eBooks on the iPad that do not require you to sell in the iBook Store.

 

[s2mikey]

I disagree. Apple may have asked for it but all the publishers had to do was say no. It hurts Apple more than the publishers if they don't have a contract because in this business content is king. If Amazon routinely has the selection you are looking for and Apple doesn't you will eventually stop trying to buy from Apple.

Well, saying no to Apple kind of hurts your potential sales a lot. It's like when a company says no to Wal Mart. You just lost the chance to be in the most popular stores in the world. Not good for sales. I dunno. When the major vendor or player in the market wants a certain price, you are almost compelled to agree.

This will be interesting.

 

[Skull One]

My lawyer - with 30 years in the publishing business - says this is total BS, will fall apart in the initial stages and will never end up in front of a judge.

No laws have been broken.

This is a voluntary sales agreement being offered openly and without prejudice. If the publishers wish to sell thorough the iBook Store they must agree to sell for no lower prices anywhere else.

Not price fixing. All voluntary.

There are plenty of options for the sale of eBooks on the iPad that do not require you to sell in the iBook Store.

Piece of advice. If you are paying that lawyer even a dime, I would make sure you get your money back and find a new lawyer.

I have spent the last 20 years dealing directly with the laws that involve non-discriminatory pricing and sales. I have, at my disposal, a team of six lawyers from my client who is a Fortune 1000 company that periodically reviews my software whenever I make a change that deals with this very subject. I won't even bother to site the laws involved. I will just bring one very simple fact to light for the purposes of this conversation.

THREE of the defendants have submitted their settlements to the DOJ. Companies don't submit settlements within 24 hours of a case being filed unless they know for a fact they will lose because they broke one or more laws.

 

[AQ_OC]

Frankly, I have to believe this has merit...the DOJ people would not be doing this in public if they didn't know they had the full weight of the law behind them. They seem very serious about this.

What confuses me is why would Apple walk into a mess like this. They must have lawyers up the yazoo. I guess they just decided to test the waters and see if they could get away with it. Sometimes one just challenges the law, even though I suppose there could be honest disagreements on interpertations of law.

I'm not going to lie...I'm glad Apple is losing on this one. There is a reason I buy from Amazon/Audible and use my Kindle App on my iPad and NOT iBooks (though, I do like iBooks as an app). The price fixing must be controlled, i.e., eliminated.

I admit that I do have a few albums I bought on iTunes. I like the interface on the iPad/iPhone (not PC) and redownloading music is a please. I've made a informed decision to pay them an extra buck or two over the Amazon price a few times, and sometimes the Amazon price is not better.

I don't think you can pay me to buy a movie on iTunes, but that's because I buy Blu-rays and have netflix & hbogo.

Anything, back on topic. I think Skull One has nailed this. It will be interesting to watch it all play out.

 

[andrzejls]

Thank you for your professional assessment of the situation. Apple acts as a "no law apply to me. I am Apple" monopoly. It is a high time to clip their wings. I spent a lot of money buying books from them. Are they going to give some money back?. No wonder they have so much cash.

 

[beesknees]

DOJ doesn't file this type of lawsuit until the evidence is already established. That is a precedent that goes back at least 60 years.

If Apple was the driving force that is evidence enough to name them. It doesn't mean the suit will be successful. The DOJ doesn't win them all. Apple may be guilty of something else in this situation too but since they ultimately had no power to actually set the prices I don't get price fixing.

 

[beesknees]

Well, saying no to Apple kind of hurts your potential sales a lot. It's like when a company says no to Wal Mart. You just lost the chance to be in the most popular stores in the world. Not good for sales. I dunno. When the major vendor or player in the market wants a certain price, you are almost compelled to agree.

This will be interesting.

That is not the case here. In this case you have rights to things no one else can supply and people can purchase from a number of sources. This was about greed not leverage.

If you open a bookstore but you don't stock some of the best sellers people will just go to another store.

 

[thewitt]

I'd love to see the DOJ win/lose statistics. I bet they are much more balanced than is being stated here by those supposedly in the know. I can think of a dozen high profile losses off the top of my head.

 

[Skull One]

If Apple was the driving force that is evidence enough to name them. It doesn't mean the suit will be successful. The DOJ doesn't win them all. Apple may be guilty of something else in this situation too but since they ultimately had no power to actually set the prices I don't get price fixing.

Ok lets use a real world example then. Lets drop back 10 yards and talk about what is legal price fixing. And yes I know that doesn't exist but give me some leeway for a bit to explain.

Manufacturer Suggested Retail Price (MSRP) is a legal disclaimer. It means, this is the price we "suggest (wink wink)" you sell the product for but you don't have to legally (drat). The reason the seller doesn't have to follow MSRP is simple. The seller owns the inventory it is selling. The product no longer legally belongs to the manufacturer. That covers about 80+% of all retail sales.

Now, how do we get legal price fixing from that? Lets get specific now. The iPhone 4 was introduced to Verizon Wireless in Feb 2011. If you bought the iPhone 16GB from VZW off contract, it was $650. If you bought it from Apple it was $600. Why was there a price difference? VZW signed a contract to sell X number of phones at X price. The phones legally still belonged to Apple and VZW was acting as a consignment seller. That means for VZW to make a profit, it had to mark the phone up. And it did. Now at any time, VZW could have bought the entire contract out. And VZW would then own the inventory. That would allow them to set any price point they wanted going forward. BUT Apple could then legally refuse to sell them any more phones after that point. Everything being done is 100% legal.

Now we have shown what MSRP is and why you can sell below it. And what legal price fixing is and why it isn't illegal.

So why is Apple being accused of "price fixing" if the manufacturer is setting the price? The manufacturer can set the MSRP. The manufacturer can exercise contracts as I have shown. And the seller can exercise his right to buy the inventory and sell the inventory at any price point. But Apple made one mistake and removed the legal rights of the other seller. By having the manufacturer sign a contract that specifically states you can not sell your product thru any other venue without our price being the lowest, you just removed the legal rights of all the sellers involved with inventory of that product.

Apple is dictating what price point Amazon has to sell its legally owned inventory at. Apple didn't make the product. Apple isn't involved in the manufacturing process of the product. Amazon doesn't even have a contract with Apple concerning that specific inventory.

And that is why Apple is being sued for price fixing.

 

[Skull One]

I'd love to see the DOJ win/lose statistics. I bet they are much more balanced than is being stated here by those supposedly in the know. I can think of a dozen high profile losses off the top of my head.

First off, no one has stated the win/loss record of the DOJ. All that was stated was that the DOJ doesn't file a national level lawsuit without having evidence already in hand before going to court.

And the win/loss ratio is irrelevant to this case. Since a jury has to hear the arguments and then render a verdict. Regardless of how "good" the evidence is, a bad jury can undermine a winning case due to a simple misunderstanding of the facts at hand.

 

[AQ_OC]

That is a very nicely worded example, skull.