Apple Inc. (NASDAQ:AAPL) has agreed to a conditional $450 million settlement with prosecutors in 33 states to end an antitrust lawsuit over the company’s e-book pricing policies. The sum will be paid only if a federal court rejects the company's appeal of a lower court's decision that paved the way for the 33 state prosecutors to sue Apple.
Apple has admitted no guilt in the matter.
The 2nd U.S. Circuit Court of Appeals of New York could uphold the lower court's decision, thus ensuring that Apple pays the $450 million, reduce the settlement amount or scrap the settlement entirely.
"This settlement proves that even the biggest, most powerful companies in the world must play by the same rules,” New York Attorney General Eric Schneiderman said in a statement Wednesday praising the agreement.
“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 eBook 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.”
The antitrust suit, filed in April 2012, alleged that Apple executives regularly met with heads of five of the largest U.S. publishers in the private dining rooms of upscale New York City restaurants to plot the best ways to counteract the Amazon.com Inc. (NASDAQ:AMZ) practice of providing large discounts on their e-books. According to the Wall Street Journal, the executives emailed each other about "the wretched $9.99 price point” and settled on a deal that lifted the price of most best-selling e-books to $12.99 to $14.99.
Apple has consistently refuted the allegations, promising to appeal the judge’s decision on the settlement (which the company agreed to) last month.
“Apple did not conspire to fix e-book pricing, and we will continue to fight those allegations on appeal. We did nothing wrong and we believe a fair assessment of the facts will show it,” a company statement read. “The iBooks Store has been good for consumers and the publishing industry as a whole, from well-known authors to first time novelists. As we wait for the court to hear our appeals, we have agreed to a settlement which is contingent on the outcome of the appeal. If we are vindicated by the appeals court, no settlement will be paid.” Under terms of the conditional settlement, $400 million will go to customers and $50 million will go to lawyers.
The settlement with Apple comes in addition to a $166 million agreement between prosecutors and book publishers, stemming from the same alleged price-fixing conspiracy.
Apple maintains it committed no wrongdoing, yet a federal judge ruled in June that the Cupertino, California-based company colluded with book publishers, conspiring to raise the price of e-books.