Price fixing is one of the main issues that the US anti-trust law has historically frowned upon as being anticompetitive and against the interest of consumers hence illegal. The US v Apple (2015) is a case in point in which the US Circuit Court of Appeal seemed to have extended this longstanding prohibition against the practice. Price fixing generally refers to an antitrade practice in which to or more undertakings conspire to raise or lower prices of products with the intention of driving out competitors who cannot operate under the set prices and later review the prices after other firms have been driven out of the market. This practice also exploits consumers besides inhibiting or distorting effective market competition.
In this case, it had been alleged before a US District Judge in 2013 that Apple had entered into a conspiracy with five e-book publishers with the intent of increasing their market prices against the relevant provisions of the US Anti-trust laws. The trial judge agreed with the Justice Department, the plaintiffs that Apple had played a substantial role in the conspiracy and thus ruled against Apple. On appeal to the Circuit Court of Appeal, the appellate court upheld the ruling holding that the actions by Apple were in restraint on trade (Raymond & Stempel online). The court ordered Apple to pay $450 to consumers in settlement as its practice was aimed at eliminates competition in retail price of e-books and to increase their prices to the detriment of consumers. One circuit judge, Justice Dennis Jacobs, however, dissented arguing that the behavior by Apple to him was pro-competition as it represented a positive step to effectively compete with Amazon which holds a monopoly position in the e-book market.
Analytically, however, as an article by Parloff (online) notes, the case is more than this as it raises serious competition law issues that are of significance to the US antitrust law. According to this author, the case shows the balancing act that courts have to do in distinguishing between pro-competitive and anti-competitive market conduct by undertakings and their potential impacts on both the market dynamics and consumers. Moreover, this case extends the long standing principle of US anti-trust law and policy that horizontal price fixing between firms at the same market level is prima facie and per se illegal. Furthermore, the ruling in this case as Parloff observes may have overruled the decision in Leegin Creative Leather Prods., Inc. v. PSKS, Inc. which had long considered vertical price –fixing agreements between firms as based on rule of reason rather than on per se rule as Apple appeal to the US Supreme Court argues.
Works Cited
Parloff, Roger. “Apple will ask Supreme Court to hear its e-books price-fixing case”. Fortune, 17 Sept. 2015. Web. < http://fortune.com/2015/09/17/apple-ebooks-price-fixing/>.
Raymond, Nate and Jonathan Stempel. “Apple conspired to fix e-book prices: U.S. appeals court”. Reuters. 30 June 2015. Web. < http://www.reuters.com/article/us-apple-ebooks-decision- idUSKCN0PA1RS20150630#Uhv2d9yumeAywEFr.97>.
