An Examination of the case, United States v. Apple Inc., with implications towards Future Practices of Anti-Trust Law

As there were strong competitors existing in the e-book market, Apple Inc. choose a strategy to avoid a price war when entering that new market, choosing to compete via non-price advantages. In pursuit of its strategy, Apple Inc. signed contracts combining an agency model and price parity provisions with the Big Six publishing companies. This conduct influenced the contracts of supply between Amazon and those publishing companies which, comprising more than sixty percent of the publishing market, forced Amazon to yield to a renegotiation of prior contracts meeting the same terms to which Apple Inc. had agreed with those companies. Thus Amazon abandoned its low pricing strategy. The US Department of Justice started its investigation after Amazon filed a complaint to the government accusing Apple Inc. of violating the anti-trust law, the Sherman Act, Section 1. The U.S. Federal Southern District Court of New York agreed with the argument of the Department of Justice to assess the case on the basis of the per se rule. This research explores the precedents of the Supreme Court of United States in defining the legal precedents and case histories involving both relevant bases of legal analysis via the per se rule and the rule of reason. After analyzing the intricacy of the agency model and price parity provisions through the platform theory and scenario analyses, this research concludes that Apple Inc. did indeed violate the Sherman Act Section 1 even as the courts had ruled. This is because Apple Inc. had facilitated horizontal price-fixing which is deemed as a per se illegality. Even by the rule of reason, Apple Inc. failed to prove that its conduct benefited the e-book market and /or was necessary for it to enter the market as a new entrant. Therefore, Apple could not prove that it had not violated the Sherman Act Section 1.