Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Apple’s cooperation diminishing, says antitrust compliance monitor, (Apr 17, 2015)

By Linda O’Brien, J.D., LL.M.

The External Compliance Monitor (ECM) appointed in the federal and state antitrust “e-books” price fixing action against Apple Inc. has reported to the federal district court in New York City that the reporting period was “marked by both progress and setbacks.” On April 16, Monitor Michael Bromwich filed the third in a series of semiannual reports with the court, providing a review and assessment of Apple’s revised Antitrust Compliance Program. The ECM explained that progress was made in Apple developing and implementing its antitrust training program. However, Apple’s cooperation diminished substantially toward the end of the reporting period and some requests for information remain in dispute (U.S. v. Apple Inc., Case 1:12-cv-02826-DLC-MHD).

The court appointed the monitor to oversee the company’s antitrust compliance policies as part of a final judgment which was imposed on Apple after the company was found to have orchestrated a conspiracy among publishers to fix retail prices for electronic books or e-books.

According to the ECM, the assessment and recommendations set forth in the First Report were very preliminary due to substantial delays in efforts to obtain relevant documents and interview relevant personnel. Despite impediments of Apple’s continued resistance to the monitoring work, the ECM was able to report significant progress in fulfilling his responsibilities. The ECM noted in the Second Report that, while Apple’s Antitrust Compliance Program that currently existed was an improvement on what existed before the final judgment and reflected an investment of substantial time, effort, and resources, the program remained a work in progress.

The primary objective of the ECM during the reporting period was to enhance his understanding of Apple’s business and antitrust risks associated with the company’s activities, which was critical to the development of a comprehensive and effective antitrust compliance program. Since Apple was unwilling to provide the monitoring team with substantive information relating to the antitrust risk assessment it was conducting, the team was compelled to gather facts through interviews and documents as to which risks Apple’s program must address in order to be comprehensive. A second goal was to further understand Apple’s legal and compliance functions that are used to address compliance issues. A third goal was to evaluate Apple’s implementation of the recommendations made in the second report.

Apple continues to develop and improve its Antitrust Compliance Program and has made progress toward implementing numerous recommendations made in previous reports. However, significant gaps remain in the program. The ECM has been unable to assess the efficacy and impact of Apple’s antitrust risk assessment, and Apple has not implemented sufficient procedures to promote and ensure antitrust compliance. Furthermore, Apple’s program continues to lack an authoritative and independent antitrust compliance officer and adequate oversight board.

The ECM noted that Apple’s cooperation with the monitoring team sharply declined toward the end of the reporting period and some longstanding requests for information remain in dispute. Apple has rejected requests to interview business personnel, declined to provide certain documents and information, and unilaterally identified a small number of training sessions it which the company would allow the team to monitor. Additionally, communications with Apple have reverted to a more adversarial tone, including attempts to prescribe and limit how the ECM should conduct his review.

Despite significant difficulties, Apple has made progress in developing a program that is comprehensive and effective, including implementing numerous recommendations made in previous reports that are designed to make important and significant improvements. The ECM appeared hopeful in working with Apple to resolve the disputes relating to requests for information and interviews and ability to monitor training that have hampered its review.

Companies: Apple Inc.

News: Antitrust NewYorkNews