US government calls for tougher restrictions against Apple

A showdown between Apple and the US government and dozens of states, which called for tough new restrictions to be imposed yesterday on the company for illegally conspiring to raise e-book prices is imminent,  say commentators.

The changes proposed by the US Department of Justice and 33 US states and territories were aimed at stopping Apple from committing further antitrust violations following US district judge Denise Cote saying on 10 July that Apple had a "central role" in a conspiracy with five major publishers to jack up e-book prices.

However, the proposed changes extended beyond e-books, which would limit Apple's ability to negotiate for such content as movies, music and TV shows, and increase the regulatory oversight of other business areas such as the company's App Store.

Amazon.com Inc commands around 65 per cent of the US e-books market, even as Apple's share had been estimated it in the single digits.

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

It added, the resulting cost of this relief, not only in dollars but also lost opportunities for US businesses and consumers would be vast.

US regulators have called for forcing Apple to cancel certain e-book contracts with major publishers.

They have called for Apple to be banned for five years from entering into distribution contracts deemed anti-competitive.

Following the court ruling, Apple had said it would appeal against and fight "false allegations".

Ahead of a court hearing, the Department of Justice and 33 State attorneys general submitted their 'remedy' to the court on 9 August.

According to Bill Baer, assistant attorney general in charge of the Department of Justice's Antitrust Division, the court found that Apple's illegal conduct deprived consumers of the benefits of e-book price competition and forced them to pay prices that were substantially higher.

He added, under the department's proposed order, Apple's illegal conduct would cease and Apple and its senior executives would be prevented from conspiring to thwart competition in the future.

The regulators also asked Apple to offer links to other e-book retailers like Amazon and Barnes & Noble for two years, to allow consumers who bought e-books on their iPads and iPhones to compare Apple's prices with those of its competitors.

They added this would "reset competition to the conditions that existed before the conspiracy".