Unites States of America v. Apple, Inc. et al

Filing 186

Letter addressed to Judge Cote from Amazon.com, Inc. (Michael Kipling) dated 2/19/2013 re: Apple/Amazon discovery dispute. Document filed by Amazon.Com, Inc. (Attachments: #(1) Exhibit Zapolsky Decl., #(2) Exhibit A, #(3) Exhibit B, #(4) Exhibit C) (cr)

Exhibit C

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CAQBELEC
CONFERENCE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------x
IN RE: ELECTRONIC BOOKS
ANTITRUST LITIGATION,

11 MD 2293 (DLC)
------------------------------x
UNITED STATES OF AMERICA,
Plaintiff,
v.

12 CV 2826 (DLC)

APPLE, INC., et al.,
Defendants.
------------------------------x
THE STATE OF TEXAS, et al.,
Plaintiffs,
v.

12 CV 3394 (DLC)

PENGUIN GROUP (USA) INC., et
al.,
Defendants.
------------------------------x
IN RE AMAZON.COM
Regarding subpoena directed
to Amazon.com

12 MC351 (DLC)

------------------------------x
New York, N.Y.
October 26, 2012
11:13 a.m.
Before:
HON. DENISE COTE,
District Judge
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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the rule of reason test will be whether the agency agreements
here promoted competition or suppressed it. And that will be
in the context of this specific industry and including an
understanding of the devices that existed or came to exist
within our period of time. It will involve us looking at this
industry, the e-books market, before the agency agreements were
entered into and after they were entered into and the effect of
the agency agreements on the e-books market.
It will also permit us to explore the reason the
defendants adopted agency agreements. But as the Chicago Board
of Trade decision makes clear, even good intentions will not
save an illegal restraint, but an understanding of the
defendants' motivation may help me in interpreting the factual
context of these other pieces of evidence with which I'll be
presented.
I do not understand that the subjective intent of
third parties and competitors is really relevant. What they
were doing in the marketplace would have a profound effect on
the rule of reason analysis. What the defendants believed
their competitors were doing in the marketplace would be, I
think, highly relevant in understanding their motive in the way
I've just outlined. But the subjective intent, thus the
planning and the strategy of a competitor that is not publicly
disclosed, I don't think is relevant, at least not sufficiently
relevant when we're talking about third-party discovery here of
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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a key competitor.
And I can't put aside the fact, even though we have
confidentiality agreements, that highly sensitive information
could be misused despite the best intent of one and all
involved in the litigation. Therefore, I do think that there
is a necessity for me to consider whether a sufficient reason
has been shown for production of this material.
Now, in Apple's rule of reason argument in March, it
didn't talk much about the things that we're discussing today.
It talked about looking at the increasing demand for e-books,
Apple's standard practices with respect to commissions, Apple's
share of the e-book market, the price and output of e-books
rising together, whether or not $9.99 is below wholesale price,
whether there were entry barriers to the e-book market, whether
the agency agreements enabled entry into the e-books market and
increased sales of e-books or triggered competition in the
device market.
The only part of that argument that I think
overlaps -- that is, the argument made in March by Apple -with what's been argued today is the following: That is, that
Apple contended that it was Amazon's plan to recoup any losses
it sustained in its e-book business by, down the road,
super-competitive pricing once it had maintained and
established a monopoly.
So, again, I don't think Amazon's internal planning is
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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very relevant here to whether or not the defendants violated
the antitrust laws. While the defendants' anticipation of what
Amazon was going to do might be highly relevant, what Amazon
internally planned to do I don't think is that relevant. What
Amazon actually did do or didn't do is very relevant, and I
think we need to make sure we have a good handle on that. And
I understand that the documents that are going to be produced
are going to give people that handle on what actually happened
in the market before and after the agency agreements were
adopted.
With respect to these four document requests, again -and I may have led us down an unhelpful road here. I don't
think that, number one, the strategic plans, et cetera, is
appropriate for discovery.
Number two, which is the Amazon-- Amazon's involvement
in regulatory investigations. I believe, if I remember
correctly, that Amazon has agreed to provide that material with
respect to the investigations related to this litigation, the
antitrust investigation of the e-books market which has led to
lawsuits against the defendants who appear before me.
Am I right with respect to that, Mr. Kipling?
MR. KIPLING: You are, your Honor.
THE COURT: And I think that should be sufficient with
respect to that point.
With respect to number three, as I understand it,
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]