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Apple ebook price-fix settlement: Readers get $400m, lawyers $50m

Antitrust battle nears merciful end – if appeals court doesn't shoot down settlement

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Details have emerged of Apple's out-of-court settlement with 33 US states that had accused the company of hiking up ebook prices.

US attorneys general revealed today that the iPad maker is on the hook to pay out $400m to readers. Lawyers will walk away with as much as $50m on top of that.

The conditional settlement will only go ahead if the 2nd US Circuit Court of Appeals in New York declines a pending appeal from Apple. The court of appeals could decided to cut the $450m figure to $70m ($50m for affected buyers) or scrap it completely.

Apple is appealing against a New York federal judge's ruling in 2013 that the tech giant participated in a price-fixing conspiracy that raised the prices of ebooks. The US states are using that federal court decision to strong-arm Apple into a settlement.

"This settlement proves that even the biggest, most powerful companies in the world must play by the same rules as everyone else," New York State Attorney General Schneiderman said in announcing the pact.

"In a major victory, our settlement has the potential to result in Apple paying hundreds of millions of dollars to consumers to compensate them for paying unlawfully inflated E-book prices. We will continue to work with our colleagues in other states to ensure that all companies compete fairly with the knowledge that no one is above the law."

Apple agreed to the settlement package in June, but the details had been kept under wraps as Cupertino is waiting to play out its final appeal before formalizing the deal.

The 33 states had sought out a payment of as much as $840m in the case.

The price-fixing lawsuit centered around deals Apple had made with five major publishers to sell titles exclusively through its iBooks software, with Apple taking a 30 per cent cut of each sale.

The plaintiffs, including US regulatory agencies, claimed Apple and publishers colluded to set high prices for digital books so that Apple could take a worthwhile cut and the publishers bank more dollars. This was at a time when Amazon was flogging ebooks at low, low prices, which infuriated Apple's then-CEO Steve Jobs.

This collusion, the court was told, violated price-fixing measures.

Last year, in a settlement with the Department of Justice, Apple agreed to a series of measures that would remedy the situation including the elimination of "most favored nation" pricing contracts with publishers.

The individual publishers named in the case have all previously signed settlements, leaving Apple the lone hold-out in the case. ®

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