Apple Needs a Babysitter: U.S. Dept. of Justice Argues for Reinstatement of an Antitrust Monitor

January 28, 2014

On Friday, Apple Inc. was successful in its effort to get a stay on the imposition of an antitrust monitor. In July, District Court Judge Denise Cote (Manhattan) found that Apple had violated antitrust laws for its part in a conspiracy to fix the price of e-books. Apple had been accused of scheming with five of the six largest publishers in order to increase e-book prices, beginning in late 2009. The allegations claimed that the group was working together to break Amazon’s hold on the market with the Kindle e-reader. The court found that Apple had conspired with the publishers to eliminate retail price competition in order to raise e-book prices. In October, Judge Cote named former Assistant U.S. Attorney and Justice Department Inspector General Michael Bromwich as an antitrust monitor for Apple for the next two years. His job is to work inside the company to maintain Apple’s compliance with U.S. antitrust laws.
Apple had voiced objections about Bromwich’s conduct, complaining that he had been conducting a “quasi-inquisitorial, quasi-prosecutorial” investigation, and arguing that it would suffer irreparable harm if he was not removed. Specifically, Apple asserted the Bromwich’s investigation might impede its ability to develop new products. It also objected to his $1,100 per hour fee.
The Justice Department countered, saying that “Apple’s complaints . . . demonstrate only that the monitor is trying to do his job. Even if Apple could establish that the monitor had exceeded his authority, the proper relief at most would be disqualification of this particular monitor.” Bromwich has denied any overreaching and said that Apple had been impeding his work.
Apple’s claims that Bromwich had overreached his authority in monitoring the company were taken under consideration by the 2nd U.S. Circuit Court of Appeals in New York. On Tuesday (January 22, 2014), the Court put Bromwich’s work on hold so that a three-judge panel could review Apple’s request to halt his work, while it fully appeals whether there should be a monitor at all.

The government urged the Court to reject Apple’s request for removal of the antitrust monitor, saying it “cannot be trusted, on its own” to develop antitrust compliance and training programs.

On Friday, the U.S. Department of Justice filed a brief asserting that Apple did not produce the required “strong showing” that Judge Cote abused her discretion in requiring appointment of the monitor for two years. Additionally, it claimed that Apple did not produce a sufficient showing that the company would suffer irreparable harm unless the monitor was removed. Finally, it argued that “the public interest weighs firmly against any delay in the monitor’s work.” The government urged the Court to reject Apple’s request for removal of the antitrust monitor, saying the company “cannot be trusted, on its own” to develop effective antitrust compliance and training programs. It also argued that taxpayers should “never again have to pay for the government to investigate Apple for antitrust violations.”
The 2nd Circuit panel is expected to hear oral arguments on Apple’s request for a longer stay on February 4th.