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

Filing 211

MEMORANDUM OF LAW in Support re: 210 MOTION for Entry of Judgment under Rule 54(b) and 15 U.S.C. § 16(b)-(h).. Document filed by Unites States of America. (Attachments: # 1 Exhibit A - Proposed Penguin Final Judgment, # 2 Exhibit B - Certificate of Compliance)(Fleming, Stephanie)

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
__________________________________________
)
UNITED STATES OF AMERICA,
)
)
Plaintiff,
) Civil Action No. 12-CV-2826 (DLC)
)
v.
)
) ECF Case
APPLE, INC., et al.,
)
)
Defendants.
)
__________________________________________)
MEMORANDUM IN SUPPORT OF MOTION BY THE UNITED STATES
FOR ENTRY OF THE PROPOSED PENGUIN FINAL JUDGMENT
Pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act, 15 U.S.C. § 16(b)(h) (“APPA” or “Tunney Act”), the United States moves for entry of the proposed Final
Judgment as to Defendants The Penguin Group, a division of Pearson PLC, and Penguin Group
(USA), Inc. (collectively, “Penguin”). The proposed Final Judgment as to Penguin (“proposed
Penguin Final Judgment”), attached as Exhibit A, may be entered at this time without further
hearing if the Court determines that entry is in the public interest. The Competitive Impact
Statement filed by the United States on December 18, 2012 (Docket No. 163), and Response to
Comments filed by the United States on April 5, 2013 (Docket No. 201), explain why entry of
the proposed Penguin Final Judgment is in the public interest. The United States has attached to
this Memorandum as Exhibit B a Certificate of Compliance setting forth the steps taken by the
parties to comply with all applicable provisions of the APPA, and certifying that the statutory
waiting period has expired.

I.

BACKGROUND

On April 11, 2012, the United States filed a civil antitrust Complaint alleging that Apple,
Inc. (“Apple”) and five of the six largest publishers in the United States (“Publisher
Defendants”) conspired to raise prices of electronic books (“e-books”) in the United States in
violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. This court entered a Final Judgment
(“Original Final Judgment”) as to three settling Publisher Defendants, Hachette Book Group,
Inc., HarperCollins Publishers L.L.C., and Simon & Schuster, Inc., on September 6, 2012
(Docket No. 119).
On December 18, 2012, the United States reached a settlement with Penguin on
substantially the same terms as those contained in the Original Final Judgment, and filed the
proposed Penguin Final Judgment and a Stipulation signed by the United States and Penguin
consenting to the entry of the proposed Penguin Final Judgment after compliance with the APPA
(Docket No. 162).

II.

COMPLIANCE WITH THE APPA

The APPA requires a sixty-day period for the submission of public comments on a
proposed Final Judgment. See 15 U.S.C. § 16(b). In compliance with the APPA, the United
States filed its Competitive Impact Statement (“CIS”) with the Court on December 18, 2012
(Docket No. 163); published the proposed Final Judgment and CIS in the Federal Register on
December 31, 2012, United States v. Apple, Inc., et al., 77 Fed. Reg. 77094; and summaries of
the terms of the proposed Final Judgment and CIS, together with directions for the submission of

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written comments relating to the proposed Final Judgment, were published in The Washington
Post for seven days beginning on December 23, 2012 and ending on December 29, 2012 and in
the New York Post for seven days beginning on December 27, 2012 and ending on January 4,
2013. Penguin filed the statement required by 15 U.S.C. § 16(g) on April 15, 2013 (Docket No.
204). The sixty-day period for public comments ended on March 5, 2013. The Division
received three comments, the response to which was filed with the Court on April 5, 2013, and
published in the Federal Register on April 15, 2013, see 78 Fed. Reg. 22298. The Certificate of
Compliance filed with this Memorandum as Exhibit B recites that all the requirements of the
APPA have now been satisfied. Following any briefing by other parties, as permitted by the
Court’s January 7, 2013 Order (Docket No. 169), it will be appropriate for the Court to make the
public interest determination required by 15 U.S.C. § 16(e) and to enter the proposed Penguin
Final Judgment.1

1

On February 8, 2013, the United States reached a settlement with Defendants Verlagsgruppe Georg von
Holtzbrinck GmbH and Holtzbrinck Publishers, LLC d/b/a Macmillan (collectively, “Macmillan”), and filed a
proposed Final Judgment as to Macmillan (“proposed Macmillan Final Judgment”) and a Stipulation signed by the
United States and Macmillan consenting to entry of the proposed Macmillan Final Judgment after compliance with
the Tunney Act (Docket No. 174). The public comment period on the proposed Macmillan Final Judgment will
expire on April 28, 2013.

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III.

STANDARD OF JUDICIAL REVIEW

The Clayton Act, as amended by the APPA, requires that proposed consent judgments in
antitrust cases brought by the United States be subject to a sixty-day public comment period,
after which the Court shall determine whether entry of the proposed Final Judgment “is in the
public interest.” 15 U.S.C. § 16(e)(1). In making that determination in accordance with the
statute, the Court shall consider:
(A) the competitive impact of such judgment, including termination of alleged
violations, provisions for enforcement and modification, duration of relief sought,
anticipated effects of alternative remedies actually considered, whether its terms
are ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a determination of
whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the relevant market
or markets, upon the public generally and individuals alleging specific injury from
the violations set forth in the complaint including consideration of the public
benefit, if any, to be derived from a determination of the issues at trial.
15 U.S.C. § 16(e)(1).
In its Opinion and Order finding that the Original Final Judgment satisfied the
requirements of the Tunney Act, this Court articulated the public interest standard under the
APPA. See United States v. Apple, Inc., 2012 WL 3865135, at *5-6 (Slip Op. (Docket No. 113)
at 12-16) (S.D.N.Y. Sept. 5, 2012). The public has had the opportunity to comment on the
proposed Penguin Final Judgment as required by law. As explained in the CIS and the Response
to Comments, entry of the proposed Penguin Final Judgment meets the standard articulated by
the Court and is in the public interest. The United States therefore requests that, following any
briefing by other parties, this Court enter the proposed Penguin Final Judgment.

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IV.

THERE IS NO JUST REASON FOR DELAY IN ENTERING THE
PROPOSED PENGUIN FINAL JUDGMENT

Because the proposed Penguin Final Judgment does not apply to all defendants in this
action, it may be entered only if the Court “expressly determines that there is no just reason for
delay.” Fed. R. Civ. P. 54(b). Upon entry of the proposed Penguin Final Judgment, Penguin will
be required to terminate any agreement with an e-book retailer that limits the retailer’s ability to
offer discounts to consumer purchasers of ebooks. See proposed Penguin Final Judgment
(Attachment A), ¶¶ IV.A and IV.B. Based on reported reductions in the prices of e-book titles
offered by HarperCollins, Hachette, and Simon & Schuster following entry of the Original Final
Judgment,2 the proposed Penguin Final Judgment likely will lead to lower e-book prices for
many Penguin titles. There is no just reason to delay the availability of these benefits for
consumers.

2

See, e.g., Scott Nichols, HarperCollins Offering Discounted eBooks After Price Fixing Settlement, TechRadar
(Sept. 12, 2012), http://www.techradar.com/news/portable-devices/portable-media/harpercollins-offeringdiscounted-ebooks-after-price-fixing-settlement-1096467 (“Bestselling ebooks from the publisher such as ‘The
Fallen Angel’ and ‘Solo’ can now be found for $9.99 on Amazon, Barnes and Noble, and other online retailers.”);
Nate Hoffelder, Hachette Has Dropped Agency Pricing on eBooks, The Digital Reader (Dec. 4, 2012),
http://www.the-digital-reader.com/2012/12/04/hachette-has-dropped-agency-pricing-on-ebooks/ (“Amazon is
discounting the ebooks by $1 to $4 from the list price, and both Barnes & Noble and Apple are making similar
discounts”); Jeremy Greenfield, Simon & Schuster Has a New Deal With Amazon, Other Retailers, Digital Book
World (Dec. 9, 2012), http://www.digitalbookworld.com/2012/looks-like-simon-schuster-has-a-new-deal-withamazon-other-retailers/ (“Ebook prices were lowered for Simon & Schuster titles over the weekend on sites like
Amazon and Nook.com to levels several dollars below what they had been earlier in the week.”).

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V.

CONCLUSION

For the reasons set forth in this Memorandum, the CIS, and the Response to Comments,
the Court should find that entry of the proposed Final Judgment is in the public interest and enter
the proposed Final Judgment.
Dated: April 18, 2013

Respectfully submitted,

s/Mark W. Ryan
Mark W. Ryan
Lawrence E. Buterman
Stephanie A. Fleming
Attorneys for the United States
United States Department of Justice
Antitrust Division
450 Fifth Street, NW, Suite 4000
Washington, DC 20530
[phone]
[e-mail]

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CERTIFICATE OF SERVICE
I, Stephanie A. Fleming, hereby certify that on April 18, 2013, I caused a copy of the
Memorandum in Support of Motion of the United States for Entry of the Proposed Penguin Final
Judgment to be served by the Electronic Case Filing System, which included the individuals
listed below.

For Apple:
Daniel S. Floyd
Gibson, Dunn & Crutcher LLP
333 S. Grand Avenue, Suite 4600
Los Angeles, CA 90070
[phone]
[e-mail]

For Hachette:
Walter B. Stuart, IV
Freshfields Bruckhaus Deringer LLP
601 Lexington Avenue
New York, NY 10022
[phone]
[e-mail]

For Macmillan and Verlagsgruppe Georg
Von Holtzbrinck GMBH:
Joel M. Mitnick
Sidley Austin LLP
787 Seventh Avenue
New York, NY 10019
[phone]
[e-mail]

For HarperCollins:
Paul Madison Eckles
Skadden, Arps, Slate, Meagher & Flom
Four Times Square, 42nd Floor
New York, NY 10036
[phone]
[e-mail]

For Penguin U.S.A. and the Penguin Group:
Daniel F. McInnis
Akin Gump Strauss Hauer & Feld, LLP
1333 New Hampshire Avenue NW
Washington, DC 20036
[phone]
[e-mail]

For Simon & Schuster:
Yehudah Lev Buchweitz
Weil, Gotshal & Manges LLP (NYC)
767 Fifth Avenue, 25th Fl.
New York, NY 10153
[phone] x8256
[e-mail]

Additionally, courtesy copies of this Memorandum in Support of Motion of the United
States for Entry of the Proposed Penguin Final Judgment have been provided to the following:

For the State of Texas:
Gabriel R. Gervey
Assistant Attorney General
Antitrust Division
Office of the Attorney General of Texas
300 W. 15th Street
Austin, Texas 78701
[phone]
[e-mail]

For the State of Connecticut:
W. Joseph Nielsen
Assistant Attorney General
Antitrust Division
Office of the Attorney General
55 Elm Street
Hartford, CT 06106
[phone]
[e-mail]

For the Private Plaintiffs:
Jeff D. Friedman
Hagens Berman
715 Hearst Ave., Suite 202
Berkeley, CA 94710
[e-mail]
[phone]

s/Stephanie A. Fleming
Stephanie A. Fleming
Attorney for the United States
United States Department of Justice
Antitrust Division
450 Fifth Street, NW, Suite 4000
Washington, DC 20530
[phone]
[e-mail]

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