But the pro-Apple (AAPL) amici curiae brief filed Wednesday by two economists lays out clearly -- more clearly perhaps than Apple's own trial lawyers -- the economic and legal issues the company tried and failed to get across to Judge Denise Cote last June. (See The view from the hard benches.)
The document submitted by CalTech's Bradford Cornell and NYU's Janusz Ordover fills more than 30 pages, but the heart of their argument is laid out in a three-paragraph summary:
Efficient markets depend on firms acting in their independent business interests. In this case, the District Court's failure to consider the economics of the vertical agreements between Apple and the Publisher Defendants led it to infer that Apple facilitated and participated in a horizontal price-fixing conspiracy. The District Court never considered evidence and economic reasoning that the vertical agreements were in Apple's independent business interest in entering e-book retailing, wholly apart from any horizontal conspiracy.
The provisions of the agreements at issue—agency, 'most-favored-nation' (MFN) clauses, and price caps—can be instrumental in facilitating new entry, particularly into markets with an entrenched, dominant firm. In this case, the District Court disregarded economic evidence and reasoning that these provisions served Apple's independent business interest in entering the e-book market, where Amazon was a near-monopolist. The District Court also ignored economic evidence and reasoning suggesting that Apple's entry into e-book retailing, and not the MFNs, allowed the Publisher Defendants to persuade Amazon to switch from a wholesale to an agency business model.
The District Court also erred in equating price increases for some e-books with harm to competition. Apple's entry into the e-book retail market dramatically increased competition by diminishing Amazon's power as a retail monopolist (and its ability to pursue a "loss-leader" strategy that inefficiently priced e-books below their acquisition cost). That increased competition gave publishers more bargaining power, thereby bringing ebook pricing closer to competitive levels. These errors threaten to chill competition by discouraging the use of common vertical contracting techniques that are often essential to facilitating the expensive and risky investments needed for entry into highly concentrated markets. Our antitrust laws should encourage, not penalize, vertical contracting arrangements that facilitate entry and enhance competition.
Apple appealed Judge Cote's ruling two weeks ago. A DOJ spokesperson said it would file its brief in May.
LINK: Economist Amicus Brief
Judge Cote's ruling, Apple says, mistook an "aikido move" for an antitrust conspiracy.
FORTUNE --Apple (AAPL) pulled no punches in the 65-page brief it filed Tuesday, asking a higher court to overturn the controversial results of last year's e-book antitrust trial and placing blame for the outcome squarely on the shoulders of the judge who heard the case.
In Apple's view, U.S. District Judge Denise Cote was not only wrong about the law MOREPhilip Elmer-DeWitt - Feb 26, 2014 8:07 AM ET
No wonder Apple didn't want an antitrust monitor crawling around the company right now.
FORTUNE -- Testifying in the e-book antitrust trial last June, Apple's (AAPL) senior vice president Eddy Cue estimated that in the 24 years he's been signing up digital content for the company he's negotiated not hundreds or thousands but tens of thousands of contracts.
In the case that put him on the stand last June -- as star witness for MOREPhilip Elmer-DeWitt - Feb 12, 2014 9:01 PM ET
The judge gets to keep her watchdog. But he's on a tight leash -- as Apple had demanded.
FORTUNE -- It took less than a week for a three-judge panel to issue a ruling in what Fortune's Roger Parloff calls "the weird and fascinating grudge match" between Apple (AAPL) and a U.S. District Court Judge.
The particular issue in this case -- the first of many expected to reach a higher court MOREPhilip Elmer-DeWitt - Feb 10, 2014 6:24 PM ET
A "weird and fascinating grudge match" had its first day in a higher court.
FORTUNE -- No one did a better job setting up the "tangled mess" that a three-judge panel of the U.S. Court of Appeals for the Second Circuit faced Tuesday morning than my Fortune colleague Roger Parloff.
We're in the middle rounds of the e-book antitrust case. The issue Tuesday pitted Apple (AAPL) against District Court Judge Denise Cote, MOREPhilip Elmer-DeWitt - Feb 4, 2014 3:52 AM ET
Barack Obama's top Sherman Act enforcer explains why his division prosecuted Apple.
FORTUNE -- Bill Baer, head of the DOJ's antitrust division, spoke at some length Thursday night about the e-book case that "put a stop" in his words, "to Apple's anticompetitive conduct."
But before he got to Apple (AAPL), Baer rattled off a list of his division's accomplishments in the five years since President Obama a took office. Among them:
Prosecuted price fixing and bid rigging MOREPhilip Elmer-DeWitt - Jan 31, 2014 10:11 AM ET
Held to 5 pages by Judge Cote, one critic blasted the DOJ with pictures worth 5,000 words.
FORTUNE -- I missed this legal curio when it was filed back in Sept. 2012 by an amicus curiae (friend of the court) in the case of U.S.A. v. Apple et al. But it caught the eye of both the New York Times' Media Decoder blog and the legal website Above the Law, and MOREPhilip Elmer-DeWitt - Dec 7, 2013 12:36 PM ET
News Corp's Wall Street Journal calls for Judge Denise Cote to be taken off the case.
FORTUNE -- Most of arguments the Wall Street Journal made Friday in a strident editorial calling for the ouster of the judge in the e-book antitrust case were taken from a motion Apple (AAPL) filed last week. (See Apple to judge: You and your antitrust monitor are way out of line.)
But there was also a nugget MOREPhilip Elmer-DeWitt - Dec 6, 2013 8:12 AM ET
Tempers flared and motions flew when Apple balked at $138,432 for two weeks work.
FORTUNE -- My colleague Roger Parloff has posted a fascinating back-channel account of the rapidly deteriorating relations between Apple (AAPL) and Michael Bromwich, its court-appointed e-book antitrust monitor.
The trigger, as it so often is, was money.
"On October 24," Parloff reports, "Apple liaison [Kyle] Andeer angered Bromwich by sending him an email questioning Bromwich's proposed $1,100 hourly fee and MOREPhilip Elmer-DeWitt - Dec 3, 2013 12:23 PM ET
The $138,432 he charged for his first two weeks on the job is the least of Apple's objections.
FORTUNE -- Michael Bromwich is driving Apple (AAPL) crazy.
This should not come as a surprise. Bromwich, appointed by U.S. District Judge Denise Cote last month to make sure Apple does everything she ordered when she found Apple guilty of conspiring to fix the price of e-books, is an old hand at this kind of MOREPhilip Elmer-DeWitt - Nov 29, 2013 11:20 AM ET
|Water becoming more valuable than gold|
|What stumps Warren Buffett? Minimum wage|
|Will 7 Apples a day keep the bears away? - The Buzz|
|GM's $1.3 billion recall cost wipes out profit|
|Apple's stock split makes the math easier; new all-time high is $100|