DOJ draws up punishment for Apple

The Justice Department asked a federal court on Friday to impose a series of changes to Apple's business practices following the company's conviction last month on price-fixing charges.


Among other changes, Apple would have to allow Amazon, Barnes & Noble and other e-book retailers to provide links from their e-book apps to their online bookstores. The feature, which would be mandated for two years, would allow consumers to easily compare prices, the Justice Department said. 

The agency is not seeking monetary damages, but a coalition of 33 state attorneys general are expected to ask for fines as part of a separate trial.

“Under the department’s proposed order, Apple’s illegal conduct will cease and Apple and its senior executives will be prevented from conspiring to thwart competition in the future,” Bill Baer, the chief of the Justice Department's Antitrust Division, said in a statement. 

A federal judge in New York found Apple guilty last month of illegally conspiring with publishers to raise the price of e-books.

After a three-week trial, Judge Denise Cote determined that Apple "played a central role in facilitating and executing" a conspiracy to stifle competition from Amazon and raise the price of most e-books by two or three dollars. 

Apple has insisted that it did nothing wrong. An Apple spokesman did not respond to a request to comment on the proposed remedy on Friday.  

In her ruling, Cote wrote that the publishers and Apple were frustrated with Amazon's $9.99 price for most e-books. In early 2010, with Apple's coordination, the publishers all agreed to switch from a wholesale model where booksellers set prices to an "agency model," where the publishers set the prices and the booksellers act as agents, Cote determined.

The five publishers — Macmillan, Penguin Group, Hachette, HarperCollins and Simon & Schuster— settled with the Justice Department, leaving Apple as the only company to fight the charges in court.

Under the Justice Department's proposed remedy, Apple would have to terminate its agreements with the five publishers and would be barred from entering into similar agreements for five years. 

The restrictions would also apply to Apple's negotiations with suppliers of music, movies and television shows.

The court would appoint an external monitor to examine Apple's business practices to ensure they are not stifling competition. The company would also have to hire an internal antitrust officer to conduct audits and train senior executives about antitrust laws. 

The court will hold a hearing on the proposed remedy on Aug. 9.