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US regulators press Apple on e-books

US government and 33 states urge new restrictions on technology company for allegedly conspiring to raise e-book prices.

Last Modified: 03 Aug 2013 09:38
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Apple called the proposed injunction a draconian and punitive intrusion into its business [Getty images]

The US Justice Department and dozens of state attorneys general have submitted to the court a list of remedies to prevent Apple from entering into contracts with sellers of e-books, films, music and other digital content that are likely to raise prices.

The proposed changes are designed to stop Apple from committing further antitrust violations.

The plan comes out of an antitrust suit against Apple Inc and five e-book publishers.

US District Judge Denise Cote ruled last month that Apple had colluded with the publishers to raise e-book prices.

The governments' list, which needs court approval, would require that Apple end its contracts with the five publishers and be banned for five years from entering contracts that would effectively raise prices of e-books sold by rivals.

Apple would also be unable to cut deals with providers of films, music and TV programmes for its iPad tablets and iPhones that are likely to increase the prices at which rivals might sell such content.

In a court filing, Apple called the proposed injunction a draconian and punitive intrusion into its business that would hurt consumers and competition, and was wildly out of proportion to the harm it was meant to address.

"Why isn't the DOJ forcing Amazon to play fairly? This is the question the publishing industry wants answered," said Mark Coker, founder of Smashwords, an e-book publisher and distributor that works with Apple, Barnes & Noble and other companies.

"Apple brought much-needed competition to the e-book market and now the government is trying to undermine them."

Apple is accused of encouraging publishers to set the price of their e-books to undercut Amazon.com's e-book dominance.

As a result some e-book prices rose to $12.99 or $14.99 from the $9.99 that the online retailer had been charging.

Amazon.com Inc commands about 65 percent of the US e-books market, while Apple's share has been estimated in the single digits.

Judge Cote will weigh the arguments at an August 9 hearing in her Manhattan courtroom. A damages trial might follow.

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