Price Fixing Is Ok As Long As It’s The Right Sort Of Price Fixing


The Obama administration is taking Apple and a group of book publishers to court, accusing them of price fixing:

WASHINGTON — Former Apple Inc. Chief Executive Steve Jobs was a key player in a conspiracy with five major book publishers to drive up the price of digital books, federal and state officials said in antitrust lawsuits filed against the companies.

Jobs helped orchestrate a complex price-fixing plan that cost consumers tens of millions of dollars over the last two years by boosting the price of many new releases and bestsellers by $3 to $5 each, federal investigators said. Apple even proudly described the maneuver — which gave the iPad maker a guaranteed 30% commission on each e-book sold through its online marketplace — as an “aikido move,” referring to the Japanese martial art, according to the lawsuit.

“The customer pays a little more, but that’s what you want anyway,” Jobs told the publishers at one point, said Sharis Pozen, the acting head of the Justice Department’s antitrust division.

“We allege that these executives knew full well what they were doing. That is, taking steps to make sure the prices consumers paid for e-books were higher,” she said Wednesday in announcing the federal suit, which some analysts said could lead to lower e-book prices.

Business people working together to increase profits? How shocking!

Sarcasm aside, why is this criminal? If content suppliers want to charge more for their content, why can’t they do that? It’s their content. Are we suggesting that the public has a right to purchase that content at a certain price? It seems to me that producers of books or anything else ought to be able to choose who they will sell to, and for what prices. Consumers, on the other hand, can either accept that price or seek a better one somewhere else. It’s not like Apple and these book publishers don’t have any competition. There’s Amazon and the Kindle, for one, plus actual hard copy books.

But setting that aside, if that sort of price collusion on the part of Apple is illegal, then why have the federal courts upheld government-mandated price fixing in other instances? Like Nashville, for instance, where a federal judge has upheld the local city council’s ordinance keeping some taxi/limo companies from charging lower rates than their competitors:

“Affordable car service” companies in Nashville will have to abide by a $45 minimum fare ordinance — and its enforcement — for the time being after a federal judge struck down an injunction request on Monday.

Metro Livery, which provides cut-rate sedan rides, asked U.S. District Judge Kevin Sharp to halt the Metro Transportation Licensing Commission from enforcing the ordinance, claiming it unfairly limited its business.

Sharp ruled Monday that the process by which the ordinance was passed was legal and that “ ‘even foolish and misdirected provisions are generally valid’ under the rational basis standard of review.”

Sharp also mentions in his memorandum that lower fares would “undoubtedly” benefit Nashville citizens and tourists, but that it’s up to the Metro Council to make those determinations.

So Apple and a group of book publishers, private companies all, voluntarily getting together to increase prices for books in a brand new medium (the ebook) is illegal, but the government mandating a minimum price for taxi/limo service is legal?

Maybe the government should just tell businesses what their prices should be. I say that sarcastically, government price-fixing would be a disaster ending in widespread shortages and economic depression, but it’s what some people seem to want.

Rob Port

Rob Port is the editor of In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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