Apple, U.S. clash in court over e-books antitrust monitor

NEW YORK Tue Feb 4, 2014 11:04pm IST

A shattered large glass panel, part of Apple's cube store on Fifth Avenue, damaged from the results of the snowstorm on Tuesday is seen in New York, January 22, 2014. REUTERS/Shannon Stapleton

A shattered large glass panel, part of Apple's cube store on Fifth Avenue, damaged from the results of the snowstorm on Tuesday is seen in New York, January 22, 2014.

Credit: Reuters/Shannon Stapleton

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NEW YORK (Reuters) - Apple Inc (AAPL.O) urged a federal appeals court on Tuesday to put a court-appointed antitrust monitor on hold, arguing that his efforts were harming the company's business.

The iPhone maker asked the 2nd U.S. Circuit Court of Appeals in New York to halt monitor Michael Bromwich's work while the court considers Apple's bid to remove him altogether, a process that could last several months.

"We can't turn back the clock," said Theodore Boutrous, a lawyer for Apple, in explaining why the company would suffer irreparable harm if the monitor is allowed to continue before the appeals court has a chance to decide whether his appointment was appropriate in the first place.

But a U.S. Department of Justice lawyer told the court that the monitor was essential to ensure that Apple complies with the law, after a federal judge last summer found the company liable for conspiring with five publishers to raise e-book prices. Apple, the lawyer said, cannot be trusted to comply on its own.

"The preliminary injunction demands that Apple fully understands why and how it needs to comply with antitrust laws, not a year from now … but today," Finnuala Tessier said.

The three-judge panel said it would take Apple's request under advisement. For now, the monitor's work is on hold until the court determines whether to grant Apple a longer stay.

The hearing followed months of legal wrangling over Bromwich, who was appointed by U.S. District Judge Denise Cote in October to oversee Apple's compliance policies in light of her finding that Apple had illegally fixed e-book prices. Cote rejected Apple's bid to stop the monitor's work in January, and the company appealed to the 2nd Circuit.

Apple has accused Bromwich of aggressively and unnecessarily pursuing multiple interviews with top executives, including Jonathan Ive, the company's chief designer. It has also complained that Bromwich's fees and duties would cost it millions of dollars.

But the judges seemed skeptical of those arguments, noting that Apple is one of the world's richest companies.

"Maybe if they had spent some of their very valuable time keeping the company from violating antitrust laws, perhaps they wouldn't be in this position," Judge Gerard Lynch said.

Apple also argued that under Cote's order, Bromwich's powers are far too broad, permitting him unfettered access to executives and documents.

Under questioning from the judges, Tessier said the monitor's duties are limited to ensuring that effective policies are developed and implemented. He is constrained from investigating instances in which the company may have violated antitrust law and must turn over any such evidence to the court, she said.

Lynch then suggested that the court could issue an order making those limitations clear in an effort to assuage Apple's concerns. But Boutrous said the company would still oppose the monitorship as unnecessary.

The case is U.S. v. Apple, 2nd U.S. Circuit Court of Appeals, No. 14-60.

(Reporting by Joseph Ax; Editing by Bernadette Baum)

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