Apple accused of e-book price fixing

Apple is going to trial today to face government allegations that company took part into a conspiracy with book publishers resulting in pricier e-books for the consumer. The trial which puts iPad manufacturer against the US Justice Department is said to be a test of interaction policies between retailers and content providers.

The US government would have three weeks to try prove how the publishers took advantage of Apple entering to the market. In order to evade Amazons low margins to higher ones publishers and iPhone manufacturer have  agreed on fixed prices. Apple saw an opportunity considering publishers needs of a bigger profit margin and seized it.

The Justice Department accuses the participants agreeing to a fixed price instead of selling books to retailers and letting them decide what price to charge readers. The publishers turned retailers into so called “agents” who have no right of lowering the publisher-set price.

It seems that Apple is going on trial alone as five publishers agreed to eliminate prohibitions on wholesale discounts and pay $164 million to benefit consumers. The US government is not going after damages but trying to ban Apple from getting involved in similar conducts. However, if found liable Apple may still face damages in a separate trial by state attorneys general and consumer pursuing.

Companys CEO Tim Cook has been called last month to testify for  accusations related to Apples tax evading policies. He said in an interview cited by Reuters at D11 conference: “not going to sign something that says we did something we didnt do”.

A comment by the presiding judge states at the final hearing before trial, Apple may face an uphill battle.

For the Department of Justice it has already been a successful undertaking as all of the publishers have settled and lifted restrictions. The consumer prices have already been revised by the retailers.

Apples futures show a slight gain of 0.10% in share price.