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Apple Calls DOJ Proposal Invasive, Punitive and a Gift to Amazon, Asks for ‘Reasonable’ Limitations

On Friday, Judge Denise Cote will consider whether to grant the Justice Department’s request that Apple be forced to accept long-term monitoring and sweeping changes to how it operates or impose the much more limited consequences Apple wants.

In a proposed remedy submitted to the court, The DOJ contends that Apple must be compelled to take steps to “ameliorate the harm its conspiracy caused to competition and consumers.” Among the remedies proposed is a five-year restriction on engaging in agency pricing agreements for any content. That means Apple would be required to throw out its contracts with the five publisher defendants in the price-fixing case, agreements that were set as part of the publishers’ settlements with the DOJ.

In its reply, the company calls the proposal “a draconian and punitive intrusion into Apple’s business.” It asks for “reasonable limitations on Apple’s ability to share information,” similar to what is contained in the publisher’s settlement agreements, a prohibition on retail price MFNs that also echo the publishers’ settlements, and “reasonable antitrust training obligations.”

Apple points out that the publishers’ settlement agreements already prohibit publishers from entering into agency agreements without discounting for a two-year period, which the court has endorsed as long enough to “restore retail price competition to the market for trade e-books, to return prices to their competitive level.”

In addition, Apple argues that any injunction should only apply to the publishers involved in the conspiracy, not the thousands of independent publishers who also sell books through Apple.

Objecting to the proposal to dictate terms for non-book content such as music, movies and apps, the company contends, “There is no justification for this invasion into Apple’s businesses that were not directly at issue in this lawsuit, for which no conspiracy allegations were made.”

The DOJ also wants Apple to operate under the oversight of an outside compliance officer for 10 years, necessary, says the DOJ, since the conspiracy was orchestrated by people at the highest levels of the company.  Apple responds that, “This unduly burdensome remedy is plainly punitive, not to mention out of proportion to the circumstances of this case.”