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Apple Found Guilty of Fixing E-Book Prices and Conspiring With Publishers

Apple has been found guilty of unfairly pricing the e-books in its iBookstore in an effort to compete with e-reader giant Amazon, a federal judge ruled on Wednesday. U.S. District Judge Denise Cote said that plaintiffs presented “compelling evidence” that Apple had conspired with five major publishers to raise e-book prices across the industry.

“Apple chose to join forces with the publisher defendants to raise e-book prices and equipped them with the means to do so,” the judge wrote in a 159-page decision, according to Reuters. “Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did.”

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Apple was initially accused of price fixing in 2012 along with five of the six major publishers, many of which agreed to settlements by early 2013. Specifically, the Department of Justice cited the companies for conspiring to undercut Amazon’s dominant presence in the e-book industry.

To do so, Apple reportedly engaged in “agency agreements” with publishers, which allowed these companies to set higher prices and pay royalties to Apple. In turn, the federal government said this prompted Amazon to practice a similar business model, causing prices to increase across the industry.

“Apple seized the moment and brilliantly played its hand,” Cote said in her ruling. “Through the vehicle of the Apple agency agreements, the prices in the nascent e-book industry shifted upward, in some cases 50 percent or more for an individual title.”

Of the publishers involved in the conspiracy, Apple was the only company to go to trial while others settled for more than $166 million in combined damages. According to the Wall Street Journal, both Penguin Group and Harper Collins didn’t want to submit to Apple’s pricing caps, but eventually had to agree to its terms to reach Apple’s audience of customers.

The ramifications of Cote’s ruling are still unclear, but an Apple spokesperson told TechCrunch that it plans to appeal the judge’s decision. It has also been reported that Apple will attend a hearing to determine damage costs at a later date.