A.G. Schneiderman Settles With Apple In E-book Price-fixing Case

Settlement With Apple Could Result In Payments To Consumers Of Up To $400 Million

Schneiderman: This Settlement Proves That Even The Biggest, Most Powerful Companies In The World Must Play By The Same Rules

NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement with Apple Inc. arising out of Apple’s participation in a price-fixing conspiracy that a federal court in New York found raised the prices of E-books sold to consumers in New York and throughout the country. The settlement agreement, which must be approved by the court, has the potential to result in payments to consumers of $400 million, and would resolve claims for consumer damages and civil penalties brought by New York and 32 other states and territories. 

“This settlement proves that even the biggest, most powerful companies in the world must play by the same rules as everyone else,” said Attorney General Schneiderman. “In a major victory, our settlement has the potential to result in Apple paying hundreds of millions of dollars to consumers to compensate them for paying unlawfully inflated E-book prices. We will continue to work with our colleagues in other states to ensure that all companies compete fairly with the knowledge that no one is above the law.”

Under the settlement, the amount that Apple must pay E-book consumers is contingent on what happens in Apple’s appeal of the court’s July 2013 finding that Apple violated antitrust laws by orchestrating a conspiracy with five publishers to artificially raise E-book prices. Consumers nationwide (including those represented by private counsel in a related class action) will receive $400 million if the Court’s ruling that Apple violated antitrust laws is ultimately affirmed. If the Court’s ruling is not affirmed, the settlement provides for a smaller recovery of $50 million if liability must be retried, or no recovery if Apple is determined not to have violated antitrust laws. New York consumers are expected to receive approximately 7 percent, or as much as $28 million, from any amount that Apple is ultimately required to pay. In the event that the Court’s decision is upheld on appeal, Apple will also make payments to the 33 states of $20 million to resolve the states’ claims for costs, fees, and civil penalties. 

Any amount received by consumers pursuant to the settlement with Apple will be in addition to those amounts already recovered from several E-book publishers.  E-book purchasers nationwide have already received compensation from $166 million in settlement funds paid by the five publishers involved in the conspiracy – Penguin Group (USA), Inc. (now part of Penguin Random House); Holtzbrinck Publishers LLC d/b/a Macmillan; Hachette Book Group Inc.; HarperCollins Publishers LLC, and Simon & Schuster Inc.  Many E-Book consumers received these funds through automatic credits sent by Amazon and other E-book retailers.

The E-book antitrust cases involved lawsuits brought by the state attorneys general, a related action by the U.S. Department of Justice, and a related class action brought by private counsel representing consumers in 18 additional states. New York, together with Texas and Connecticut, played a leading role in the state AG cases during the damages phase of the litigation.  Apple has also agreed to make a payment of attorneys’ fees to counsel in the class action in the event that there is a consumer recovery under the settlement.

For New York, this matter was handled by Assistant Attorneys General Bob Hubbard and Linda Gargiulo; Acting Antitrust Deputy Bureau Chief Geralyn Trujillo; Antitrust Bureau Chief Eric Stock, and Executive Deputy Attorney General Karla G. Sanchez.

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