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Apple loses appeal on ebook price-fixing case

A digital book is displayed on an Apple Inc. iPad for a photograph in New York, U.S., on Wednesday, April 11, 2012. Apple Inc. and five publishers were accused by the U.S. Justice Department of conspiring to fix prices of digital books to undermine Inc.'s dominance of the industry. Photographer: Scott Eells/Bloomberg

A New York appeals court on Tuesday sided with regulators who said Apple was guilty of manipulating the cost of e-books.

Calling Apple's transgressions, "the supreme evil of antitrust," the Second Circuit Court upheld a 2013 verdict that found Apple conspired in 2010 with five major book publishers -- Harper Collins, Penguin, Simon & Schuster, Hachette and Macmillan -- to fix ebook prices to halt the surge of e-book distributor Amazon.

The ruling is the latest in long running feud between Apple and the Department of Justice over what the department alleged was "horizontal price-fixing." It also means Apple could begin paying $450 million of reparations to victims in the class-action lawsuit.

Apple can appeal the decision to the Supreme Court.

“Apple did not conspire to fix ebook pricing and this ruling does nothing to change the facts," Apple said in a statement. "We are disappointed the court does not recognize the innovation and choice the iBooks Store brought for consumers. While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps.”

But the court, in a 2-1 decision, disagreed.

"By organizing a price‐fixing conspiracy, Apple found an easy path to opening its iBookstore, but it did so by ensuring that market‐wide e-book prices would rise to a level that it, and the Publisher Defendants, had jointly agreed upon," Judge Debra Ann Livingston wrote in the court's decision.

Judge Dennis Jacobs dissented, arguing the lower court had erred by not examining the competitive pressure Apple and the publishers faced.

The Justice Department said it was "gratified" by the ruling. "The decision confirms that it is unlawful for a company to knowingly participate in a price-fixing conspiracy, whatever its specific role in the conspiracy or reason for joining it," Assistant Attorney General Bill Baer said in a statement.  "Because Apple and the defendant publishers sought to eliminate price competition in the sale of e-books, consumers were forced to pay higher prices for many e-book titles."

(Amazon founder and chief executive Jeffery P. Bezos owns The Washington Post.)