Federal court upholds $450 million settlement against Apple in ebook case

A federal appeals court has upheld Apple’s $450 million settlement of claims that it harmed consumers by conspiring with five publishers to raise e-book prices, reports Reuters. The 2nd U.S. Circuit Court of Appeals in New York rejected a challenge by an e-books purchaser to the fairness, reasonableness and adequacy of the settlement, which won approval from U.S. District Judge Denise Cote in November 2014.

Last October Apple asked the U.S. Supreme Court to overturn an appellate court decision that found the company conspired with five publishers to increase e-book prices. The Cupertino, California-based company wanted the high court to review a June ruling that favored the U.S. Department of Justice, and found the company liable for engaging in a conspiracy that violated federal antitrust laws.

Let's back up and look at history of the whole matter. In April 2012 the United States Department of Justice filed an antitrust lawsuit against Apple, Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster in New York district court, claiming collusion over ebook pricing. The brouhaha centers on Apple’s move to change the way that publishers charged for e-books as it prepared to introduce its first iPad in 2010.

Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that “wholesale model,” booksellers were then free to offer those books to customers for less than the cover price if they wished.

Apple suggested moving to an “agency model,” under which the publishers would set the price of the book and Apple would take a 30% cut. However, Apple also insisted that publishers couldn’t let rival retailers sell the same book at a lower price.