The US Court of Appeals for the Second Circuit denied a request from Apple that it remove a court-appointed antitrust monitor, a significant setback for the secretive and recalcitrant company. The firm had argued that the monitor, Michael Bromwich, was overzealous in his demands to speak with Apple executives and documents that are allegedly beyond the scope of his duties.
US District Judge Denise Cote disagreed with Apple and refused to grant the firm's request that Bromwich be removed. So Apple's final recourse was a three-judge panel in the US Court of Appeals. On Monday, it too refused to remove the monitor, though it outlined what that monitor could and could not ask of Apple.
"We are pleased with the court's decision," a US Department of Justice (DOJ) statement notes. "The appellate court's ruling reaffirms the department's and district court's decision that a monitor is necessary to oversee Apple's antitrust compliance policies, procedures, and training to help ensure that Apple does not engage in future price fixing and that US consumers never have to pay the price of their illegal conduct again. Apple must now cooperate with the court-appointed monitor."
As you might recall, Apple was accused of engineering an ebook pricing conspiracy with the biggest publishers. And although Apple quickly settled the European Union (EU) case, it decided to fight in the United States and lost big. In July 2013, Apple was found guilty of violating US antitrust law by "playing a central role" in a "conspiracy" to artificially and illegally raise the price of ebooks, harming competitors and consumers alike. And in September, Judge Cote ruled that the firm would have to curb its anti-competitive behavior and be monitored for compliance for two years.
Apple is planning to appeal its antitrust loss, but it has bristled publicly at the appointment of a monitor. In complaining about Mr. Bromwich's activities, however, the firm has only angered Judge Cote, who has noted that Apple clearly isn't interested in reforming its behavior.
Although Apple found no traction with complaints about Mr. Bromwich's attorney's fees (lower than the fee Apple pays its own lawyers), his "adversarial" stance, or his alleged bias against the company, it did win a minor point: The appellate panel stipulated that Bromwich is not allowed to stage investigations of individual Apple employees' compliance with antitrust laws. Instead, he is there to monitor Apple's compliance policies.
"The injection allowed the monitor to assess the appropriateness of the compliance programs adopted by Apple and the means used to communicate those programs to its personnel," the ruling notes. "The monitor was empowered to demand only documents relevant to his authorized responsibility as so defined, and to interview Apple directors, officers, and employees only on subjects relevant to that responsibility."
It's unclear how Apple will respond to this most recent ruling, but the firm does have a pending court date to look forward to. In May, Judge Cote will begin hearings to determine how much Apple must pay in damages for artificially raising the prices of ebooks to a class representing consumers from 16 US states. There are 33 state attorneys general involved in the case, and they're looking for $840 million in damages, a tiny sum for a company with Apple's revenues. Given its stance on this case, however, you can expect the company to fight aggressively against any damages payment.