Apple will refund up to US$400 million ($460 million) to consumers ensnared in a plot to raise the prices of digital books unless the company gets a court to overturn a decision affirming its pivotal role in the collusion.
The settlement bill emerged yesterday in a court filing made a month after attorneys suing Apple notified US District Judge Denise Cote that an agreement had been reached to avoid a trial over the issue.
Lawsuits filed on behalf of digital book buyers had originally sought damages of up to US$840 million after Cote ruled in a separate trial last year that Apple had violated US antitrust law by orchestrating a price-fixing scheme with five major publishers of electronic books.
Cote's decision sided with the US Justice Department's contention that Apple's late chief executive, Steve Jobs, had schemed with major e-book publishers to charge higher prices in response to steep discounts offered by Amazon.com. Jobs, who died in October 2011, negotiated the deals as Apple was preparing to release the first iPad in 2010.
Apple is appealing Cote's 2013 decision. The California company won't have to pay the US$400 million settlement if it prevails.
If the appeals court voids Cote's verdict and returns the case to her for further review, Apple would still have to refund US$50 million to consumers. No money will be owed if the appeals court concludes Apple didn't break any antitrust laws.
"Apple did not conspire to fix e-book pricing, and we will continue to fight those allegations on appeal," the company said. "We did nothing wrong and we believe a fair assessment of the facts will show it."
A decision on Apple's appeal, now in the Second Circuit in New York, might not be issued for another year, according to yesterday's filing.
Consumer attorneys in the case are still hoping to get Cote's preliminary approval of the settlement. If Apple's appeal is rejected, it would be more of a blow to its image than its finances. The company can easily afford to refund the money, given it has about US$150 billion in cash.
Millions of electronic book buyers will be eligible for refunds if Cote's decision is upheld, though the precise number wasn't spelled out yesterday.
More than 23 million consumers received notices of a US$166 million settlement previously reached with the five book publishers found to be conspiring with Apple. Those publishers are Hachette, HarperCollins, Macmillian, Penguin and Simon & Schuster.
Consumers who bought e-books from those five publishers in certain regions from April 2010 to May 2012 will be eligible for a slice of the settlement fund.
New York Attorney-General Eric Schneiderman estimated e-book buyers in his state could receive up to US$28 million in refunds from Apple. "This settlement proves even the biggest, most powerful companies in the world must play by the same rules as everyone else," Schneiderman said.
Besides the consumer compensation, Apple will also pay US$50 million in legal fees unless it wins its appeal. Of that, US$20 million would go to the attorneys- general and the rest to class-action lawyers led by Seattle law firm Hagens Berman.