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United States v. Apple, Inc. - 791 F.3d 290 (2d Cir. 2015)

Rule:

To hold a defendant liable for violating § 1 of the Sherman Act, a district court must find a combination or some form of concerted action between at least two legally distinct economic entities that constituted an unreasonable restraint of trade.

Facts:

Defendants Apple, Inc., Macmillan, and Simon & Schuster, Inc., appealed from a judgment of the United States District Court for the Southern District of New York that found that Apple violated § 1 of the Sherman Antitrust Act, 15 U.S.C.S. § 1 et seq., by orchestrating a conspiracy among five major publishing companies—including Macmillan and Simon & Schuster—to raise the retail prices of digital books, known as "ebooks." On the petition of plaintiffs federal Government and numerous states, the district court thereafter issued an injunctive order, which, inter alia, prevented Apple from signing agreements with those publishers that restricted its ability to set, alter, or reduce the price of ebooks, and required Apple to apply the same terms and conditions to ebook applications sold on its devices as it did to other applications.

Issue:

Was there sufficient evidence to show that Apple violated § 1 of the Sherman Act by conspiring with Macmillan, Simon & Schuster and other publishers to eliminate retail price competition and raise the price of e-books?

Answer:

Yes.

Conclusion:

The appellate court affirmed the district court's judgment. The court ruled that the district court correctly decided that Apple orchestrated a conspiracy among the publishers to raise ebook prices, that the conspiracy unreasonably restrained trade in violation of § 1  of the Sherman Act, and that the injunction was properly calibrated to protect the public from future anticompetitive harms. Because the conspiracy consisted of a group of competitors—Macmillan, Simon & Schuster and other publishers—and was assembled by Apple to increase prices, it constituted a horizontal price-fixing conspiracy and was a per se violation of the Sherman Act. 

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