UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORK
__________________________________________ )UNITED STATES OF AMERICA, ))Plaintiff, ))v. ))APPLE, INC., ) Civil Action No. 12-CV-2826 (DLC)HACHETTE BOOK GROUP, INC., )HARPERCOLLINS PUBLISHERS, L.L.C., )VERLAGSGRUPPE GEORG VON )HOLTZBRINCK GMBH, )HOLTZBRINCK PUBLISHERS, LLC )d/b/a MACMILLAN, )THE PENGUIN GROUP, )A DIVISION OF PEARSON PLC, )PENGUIN GROUP (USA), INC., and )SIMON & SCHUSTER, INC., ))Defendants. ) __________________________________________)
RESPONSE OF PLAINTIFF UNITED STATES TO PUBLIC COMMENTSON THE PROPOSED FINAL JUDGMENT
July 23, 2012
Public Comments are available athttp://www.justice.gov/atr/cases/apple/index.html.
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TABLE OF CONTENTS
PRELIMINARY STATEMENT .................................................................................................... v
I.
INTRODUCTION ................................................................................................................... 1
II.
THE COMPLAINT AND THE E-BOOK INDUSTRY ......................................................... 4
III.
STANDARD OF JUDICIAL REVIEW .................................................................................. 6
A.
The United States is Entitled to Substantial Deference in Crafting a Settlement ............ 7
B.
The Court’s “Public Interest” Inquiry Should Focus on the Relationship Betweenthe Harm Alleged and the Remedy Selected ................................................................... 8
IV. THE PROPOSED FINAL JUDGMENT ............................................................................... 10
A.
Ending Collusion by Settling Defendants ...................................................................... 10
B.
Restoring Competition for E-Books With Respect to Settling Defendants ................... 11
C.
Compliance and Enforcement ........................................................................................ 13
V. SUMMARY OF PUBLIC COMMENTS AND THE UNITED STATES’ RESPONSE ...... 15
A.
Prominent Themes in Industry Comments ..................................................................... 16
1.
A Window for Retail Discounting Eliminates Terms That Facilitated CollusionWithout Imposing a Business Model on the Industry.............................................. 16
2.
Consumers, the Victims of the Conspiracy, Will Benefit as Limits on RetailDiscounting are Lifted ............................................................................................. 18
3.
Collusion is Not Acceptable, Even in Response to Perceived AnticompetitiveConduct .................................................................................................................... 20
4.
Protection From Aggressive Competition Does Not Justify Keeping CollusiveAgreements Intact .................................................................................................... 24
5.
The Proposed Final Judgment is Neither Too Regulatory Nor Too Ambiguousfor Enforcement ....................................................................................................... 25
B.
Individual Responses to Detailed Comments ................................................................ 27
1.
Barnes & Noble, Inc. ............................................................................................... 27
2.
Consumer Federation of America ............................................................................ 34
3.
Independent Book Publishers .................................................................................. 36
4.
American Booksellers Association and Members ................................................... 38
5.
Authors Guild and Members .................................................................................... 38
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C.
Additional Responses to Comments With Unique Perspectives ................................... 43
1.
Brian DeFiore, Literary Agent ................................................................................. 43
2.
Bob Kohn, CEO of Royalty Share ........................................................................... 44
3.
Steerads, Inc. ............................................................................................................ 46
4.
National Association of College Stores ................................................................... 46
5.
American Specialty Toy Retailing Association ....................................................... 47
D.
Apple, Inc. ...................................................................................................................... 47
1.
The Proposed Final Judgment Reasonably Requires the Termination of theApple Agency Agreements ...................................................................................... 48
2.
The Proposed Final Judgment Does Not “Impose a Business Model” .................... 50
3.
The Proposed Final Judgment Will Help to Restore Competition, Not End It........ 50
4.
Apple Misstates the Standard of Review Under the Tunney Act ............................ 53
5.
Apple’s Suggested Changes to the Proposed Final Judgment Are Self-Servingand Contrary to the Public Interest .......................................................................... 54
VI. CONCLUSION...................................................................................................................... 55
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