Feds Press Continued Monitoring of Apple
MANHATTAN (CN) - A court-appointed monitor must continue overseeing Apple's antitrust compliance, the United States told the federal judge who held the company liable for fixing the e-book prices.
U.S. District Judge Denise Cote had hammed the tech giant last summer after a three-week trial, saying "powerful" and "compelling" evidence proved that Apple played a "central role in facilitating and executing" a conspiracy among competing e-book publishers "to eliminate retail price competition in order to raise e-book prices."
Cote appointed Michael Bromwich, a former inspector general with the Justice Department, with help from anti-trust specialist Bernard Nigro, to serve as an independent monitor overseeing Apple's compliance with antitrust laws.
Apple sought to have the monitor disqualified, saying the measure was "unnecessary, overbroad, vague and punitive." It never contended at the time of appointment, however, that the court lacked authority to appoint such a monitor or that her actions were unconstitutional.
As the Cupertino, Calif.-based company appeals the monitor's appointment to the 2nd Circuit, the United States challenged its contention that Cote abused her authority.
"The monitor's only task is to help the court evaluate Apple's internal antitrust compliance policies and procedures and the antitrust program required by [the judge's] injunction, to ensure the compliance programs are 'reasonably designed to detect and prevent violations of the antitrust laws,'" according to the brief by Justice Department attorney Finnuala Tessier.
As Bromwich sets to that task, Apple has resisted letting the monitor meet with its board of directors.
Apple ultimately let the monitor conduct 13 hours of interviews with 11 people, seven of whom are lawyers, according to the 63-page brief. Bromwich met with only one board member, the government said.
In its unsuccessful bid to disqualify Bromwich, Apple has complaint about supposed bias and the requirement that it pay Bromwich's salary, a factor that it says gives the monitor a financial incentive to widen the scope of his duties.
Though Apple has likened Bromwich to an investigative agent for the government, Tessier said Bromwich is working only for the benefit of the court.
"The monitor is not a prosecutor," the brief states. "And he is disinterested - he is paid for his time, not his decisions."
The monitor "has only appropriate and limited authority to review a private company's compliance with certain aspects of a district court's order," Tessier added.
In refusing to disqualify Bromwich, Judge Cote chided Apple for "doing its best to slow down ... if not stonewall the process," according to the brief.
The government said Apple waived any argument of bias or effectiveness by not raising such issues in its initial request for a stay.
Apple and the government ultimately agreed to a $450 million settlement before a scheduled Aug. 25 trial to determine damages. Of that amount, $400 million will go to consumers, and $50 million to lawyers in the case.
If Apple wins an appeal before the 2nd Circuit, however, the agreement limits it to having to pay only $70 million, of which $50 million would go to customers.
A full appellate reversal lets Apple totally off the hook.
Cote expressed concerns about the settlement during a telephone conference this summer.
Hachette, Harpercollins, The Penguin Group, Simon & Schuster, and Macmillan all settled the government's claims about the conspiracy.
The 33 states and U.S. territories that joined the lawsuit are: Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Mexico, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia Wisconsin, Puerto Rico and the District of Columbia.