Apple agrees to conditional $450 mln e-books antitrust accord

Wed Jul 16, 2014 10:52pm IST

A worker wipes a poster advertisement for Apple's iPhone 5C on a wall of Japan's biggest mobile phone operator NTT Docomo Inc shop before its launch ceremony for the start of the selling of Apple's iPhone 5S and 5C at its shop in Tokyo, September 20, 2013. REUTERS/Yuya Shino/Files

A worker wipes a poster advertisement for Apple's iPhone 5C on a wall of Japan's biggest mobile phone operator NTT Docomo Inc shop before its launch ceremony for the start of the selling of Apple's iPhone 5S and 5C at its shop in Tokyo, September 20, 2013.

Credit: Reuters/Yuya Shino/Files

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(Reuters) - Apple Inc (AAPL.O) has agreed to pay $450 million to resolve U.S. state and consumer claims the iPad manufacturer conspired with five major publishers to fix e-book prices, according to court records filed Wednesday.

The settlement, which would provide $400 million for consumers, is conditioned on the outcome of a pending appeal of a New York federal judge's ruling last year that Apple was liable for violating antitrust laws.

A ruling by the 2nd U.S. Circuit Court of Appeals in New York reversing the judge could, under the settlement, either reduce the amount Apple pays to $70 million, with $50 million for consumers, or eliminate payments altogether.

"While we cannot predict the outcome of the appeal with certainty, we are confident in the case we made against Apple at trial," Connecticut Attorney General George Jepsen said in a statement.

Apple in a statement denied that it had conspired to fix e-book prices and said it would continue pressing its case on appeal.

"We did nothing wrong and we believe a fair assessment of the facts will show it," Kristin Huguet, an Apple spokeswoman, said.

The settlement, which requires approval of U.S. District Judge Denise Cote, had been announced in June. Terms were not disclosed at the time.

It came ahead of an Aug. 25 damages trial, in which attorneys general in 33 states and territories and lawyers for a class of consumers were expected to seek up to $840 million.

The deal follows earlier settlements with five publishers that provided $166 million for e-book purchasers.

Combined with the $400 million from Apple, the recovery is "among the exceedingly rare cases that provide consumers nationwide with double the amount of their estimated damages," lawyers for the plaintiffs wrote in a motion.

The U.S. Department of Justice and the state attorneys general sued Apple and five publishers in April 2012, accusing them of working together illegally to increase e-book prices.

In July 2013, Cote found Apple liable for colluding with the publishers to impede e-book competitors such as Amazon.com Inc (AMZN.O) after a non-jury trial.

The publishers include Lagardere SCA's (LAGA.PA) Hachette Book Group Inc, News Corp's (NWSA.O) HarperCollins Publishers LLC, Penguin Group (USA) Inc, CBS Corp's (CBS.N) Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH's Macmillan.

Even if Apple does pay the full $450 million, the sum is barely 1 percent of the $37.04 billion it made in its last fiscal year, which ended in September.

Steve Berman, a lawyer for the consumer class at Hagens Berman Sobol Shapiro, said if there is an "outright reversal, then we are done." But he said he believed the 2nd Circuit would uphold Cote's ruling.

"There's always room to second guess, but this was the best deal we could get on the downside," he said in an interview.

The case is In Re: Electronic Books Antitrust Litigation, U.S. District Court for the Southern District of New York, No. 11-md-02293.

(Reporting by Nate Raymond, Alison Frankel and Jonathan Stempel in New York, Editing by Franklin Paul, Richard Chang, Noeleen Walder and Richard Chang)

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