Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Antitrust enforcers support Apple’s compliance monitor in e-book price-fixing case, (Aug 15, 2014)

By Linda O’Brien, J.D., LL.M.

In an action against Apple and five leading publishers for conspiring to fix prices in the electronic books (e-books) industry, the Department of Justice and the attorneys general of 31 states, Puerto Rico, and the District of Columbia contend that the U.S. Court of Appeals in New York City should uphold a federal trial judge’s order declining to disqualify the appointed external compliance monitor.

In July 2013, the federal district court in New York City found Apple liable for facilitating and executing a conspiracy among the publishers to fix retail prices for e-books. The court issued a permanent injunction and appointed an external compliance monitor to assist in assessing Apple’s antitrust compliance programs after Apple failed to establish an effective in-house antitrust compliance program. Apple sought the monitor’s disqualification, which the court declined, and Apple appealed.

In a joint brief filed yesterday with the Second Circuit, the Justice Department and the state attorneys general defended the district court’s ruling on the ground that the monitor’s report of his interactions with Apple were “proper and necessary” because Apple had made attacks on the monitor’s conduct and character in connection with his actions as monitor. His report, limited to information he properly obtained, enabled the court to assess Apple’s allegations and make findings, which Apple did not challenge as clearly erroneous. Moreover, he should not be disqualified, the brief asserted, since he is paid for his time.

The brief stated that Apple had already appealed the grant of the injunction and waived any arguments regarding the district court’s authority to impose a monitor. The district court properly exercised its broad discretion and inherent authority to appoint a monitor with a narrow mandate—evaluate Apple’s antitrust training and compliance programs—and limited powers. The monitor may request relevant interviews and documents and recommend changes to Apple’s compliance programs. He is disinterested, may not act as a prosecutor, and can use the injunction’s procedures to object to any actions he believes are inappropriate.

Finally, the monitorship does not implicate the separation of powers, according to the brief. The monitor has appropriate and limited authority to review a private company’s compliance with certain aspects of a court order and has no license to intrude on another branch of government. The district court did not abuse its discretion in declining to disqualify the external compliance monitor, the brief argued.

Companies: Apple Inc.

News: Antitrust AntitrustDivisionNews