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
Judge Cote makes short work of Apple's list of nine evidentiary "errors."
FORTUNE -- This may be too deep in the weeds for anyone who hasn't been following the Apple (AAPL) e-book antitrust case as closely as I have.
But I was curious how Judge Denise Cote would deal with nine evidentiary issues Apple says it will raise in its appeal of her ruling last month (pdf here) that the company was MOREPhilip Elmer-DeWitt - Aug 15, 2013 8:46 AM ET
Apple's appeal of the trial judge's verdict will hinge on the last 38 pages of her decision.
FORTUNE -- The first 122 pages of the 160-page ruling against Apple (AAPL) that U.S. District Judge Denise Cote handed down on Wednesday could have been written before the trial began.
In fact, most of them probably were.
Judge Cote was familiar with the case from having supervised the proceedings by which the five so-called Publisher MOREPhilip Elmer-DeWitt - Jul 10, 2013 1:30 PM ET
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