Apple Protests Gouging By Antitrust Compliance Monitor


Apple (NASDAQ:AAPL) has filed a complaint in a Manhattan federal court that alleges the external compliance monitor appointed by the court after the company’s e-book price-fixing conspiracy is being overpaidBloomberg reports. According to the terms stipulated in the injunction won by the U.S. Department of Justice earlier this year, Apple is responsible for paying the antitrust compliance monitor. Judge Denise Cote appointed former Assistant U.S. Attorney and Justice Department Inspector General Michael Bromwich as Apple’s compliance monitor.

However, Apple accuses Bromwich of overcharging for his services. “Mr. Bromwich appears to be simply taking advantage of the fact that there is no competition here or, in his view, any ability on the part of Apple, the subject of his authority, to push back on his demands,” said Apple in its filing obtained by Bloomberg. According to Apple, Bromwich has asked for an hourly fee of $1,100 plus a 15 percent administrative fee.

As noted in the court filing, Bromwich told Apple that he was charging the 15 percent administrative fee because his work at Apple is through his consultancy, rather than his law firm. The California-based company described Bromwich’s fees as “unprecedented in Apple’s experience” and pointed out that the compliance monitor’s invoice for the first two weeks of work was $138,432.

Besides drawing attention to Bromwich’s exorbitant fees, Apple also objected to several of the judge’s proposals. Cote proposed that the compliance monitor be allowed to interview employees without the presence of company lawyers and that Apple should report to her without any lawyers present, as well. According to Apple, via Bloomberg, those two proposals “impermissibly expand the scope of the monitorship.”

In July, Cote ruled that Apple violated antitrust laws when it conspired with multiple publishers to fix prices in the e-book business. In the trial, the government contended that Apple colluded with five other publishers in adopting agency model contracts with MFN (most favored nation) clauses that eventually forced Amazon (NASDAQ:AMZN) to also adopt the same model and raise its e-book prices.

After the trial, Cote worked with Justice Department to develop restrictions on how Apple could conduct its e-book business. Besides forcing Apple to hire an external compliance monitor appointed by the court, the injunction also imposed a staggered contract renegotiation schedule with the five settling publishers.

Follow Nathanael on Twitter @ArnoldEtan_WSCS

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