Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Apple’s ebook compliance program makes significant progress, monitor reports, (Oct 7, 2015)

By Greg Hammond, J.D.

The External Compliance Monitor (ECM) appointed in the federal and state antitrust “e-books” price fixing action against Apple Inc. has reported that Apple has made significant progress in the development and implementation of its Antitrust Compliance Program, despite difficulty in obtaining information needed to assess the program. The Fourth Report, which could be the last, was filed yesterday in the federal district court in New York City (U.S. v. Apple Inc., Case No. 1:12-cv-02826-DLC-MHD).

The district court appointed the ECM to oversee Apple’s antitrust compliance policies as part of a final judgment that 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. In the Second Report, the ECM noted that while Apple’s Antitrust Compliance Program was an improvement on what existed prior to the final judgment and reflected an investment of substantial time, effort, and resources, the program remained a work in progress. The Third Report noted that while progress was made in Apple developing and implementing its antitrust training program, Apple’s cooperation diminished substantially toward the end of the reporting period and some requests for information remained in dispute.

During the fourth, and possibly last, reporting period, the ECM noted that Apple’s Antitrust Compliance Program is substantially stronger than it was when the “monitorship” began, and stronger than when the Third Report was issued. Of particular note, Apple created a set of procedures that the ECM believes to be “reasonably designed to detect and prevent violations of the antitrust laws—at least on paper.” The monitor noted that because Apple did not provide him with information concerning whether or how it implemented the procedures thus far, the ECM could not assess whether the procedures will be effective in practice.

The ECM also noted “marked improvement in the engagement of Apple’s senior executives in the Antitrust Compliance Program,” stating that he met with four members of the Executive Team; learned that the Executive Team is beginning to discuss antitrust issues more frequently; and is aware of some members’ concrete steps to reinforce antitrust compliance within their business groups.

Although significant progress was made, the ECM disclosed that “one of the constants over the past two years has been Apple’s lack of willing cooperation with our court-mandated efforts. We continued to have requests rejected on a regular basis during this reporting period for no good reason.” The ECM added, “What weight to give this lack of cooperation, and the resulting lack of access to material information, in the context of substantial advances in the development and implementation of a credible antitrust compliance program, is ultimately for the Court to decide.”

The ECM made the following recommendations, including that Apple: (1) repeat its formal antitrust risk assessment on an annual basis at least until Final Judgment expires, and thereafter every two years, at least; (2) take steps to further highlight and explain its antitrust policies in online training; (3) direct employees to the Standards Legal Policy in a broader range of circumstances than is currently recommended in the Antitrust and Competition Law Policy; (4) consider adding ethics and compliance to the formal factors on which employees are evaluated; (5) have its senior personnel take concrete steps that emphasize the importance of antitrust compliance; and (6) have its Board exercise rigorous oversight regarding antitrust-related issues and make more diligent efforts to obtain knowledge about the elements of the Antitrust Compliance Program.

Companies: Apple Inc.

News: Antitrust NewYorkNews