The settlement is Apple's way to evade an antitrust lawsuit which stated that the company formed a conspiracy with five publishers on its bid to fix the prices of e-books. Apple's settlement request sparked an area of concern as its provisions could undervalue the consumers' claims.
One clause states that Apple will be required to pay a lower amount of $70 million if the decision from the appeals court is reversed, making the company non-liable in antitrust laws violation. Another clause that was questioned deals with Apple's freedom from the obligation of paying interest during an appeals process.
Judge Denise Cote, the U.S. District judge in Manhattan, found the clause to be indeed a troubling case if an appeals court would favor a reversal of its decision that Apple should be charged with antitrust violations and if the findings would be sent back which would require further proceedings.
"I'm concerned about the terms of the settlement," Cote said.
The attention brought by Apple's settlement scheme was sparked after lawyers that represent the consumers coming from a total of 33 U.S. states and territories submitted the settlement proposal to Cote and sought for her preliminary approval. The proposal is meant to avoid the apprehended damages trial which shall commence on August 25.
The trial had been scheduled by Cote herself after deciding on a ruling in July that Apple is guilty of conspiring with publishers to impede its competitors in the e-book market which would include Amazon.com.
The five publishers that were involved in the settlement case are identified as Verlagsgruppe Georg von Holtzbrinck GmbH's Macmillan, CBS Corp's Simon & Schuster Inc, Penguin Group Inc, News Corp's HarperCollins Publishers LLC, and Lagardere SCA's Hachette Book Group Inc.
The ruling, which came in an April 2012 lawsuit filed by the U.S. Department of Justice and the state attorneys general, concluded that damages of up to $840 million should be paid to the plaintiffs. However, the expected amount is reduced after the settlement scheme required a damage fee of $166 million from the publishers, making Apple free from paying the remaining amount of $674 million.
If Apple's appeal is unsuccessful, it would have to pay $400 million to e-book consumers and another $50 million to the lawyers of the states and plaintiffs. If it turns out to be successful but the case would be returned to Cote for further court proceedings, Apple will have to pay only $70 million wherein $50 million of it would go to the consumers.
The case will be considered as closed if the second circuit would fully reverse Cote's ruling. At this point, Apple is not obliged to pay anything.
