The US offered to ease the terms of a proposed civil injunction against Apple for conspiring to raise e-book prices, but the company said the revised proposal is still designed to "inflict punishment" and must be rejected.
At issue is how to ensure Apple does not violate anti-trust law, following a 10 July ruling by US district judge Denise Cote in Manhattan that it had conspired with five major publishers to undermine pricing by rivals including Amazon.com, which dominates the market for electronic books.
Apple says the government is overreaching by insisting it hire an external monitor, let e-book retailers add hyperlinks to their own Web sites in their e-book apps without charge, and face limits on how it negotiates for other content including movies, music and TV shows.
Cote must approve any injunction.
In a court filing, the US Department of Justice, joined by 33 US states and territories, suggested halving the length of its previously proposed injunction to five years from 10, with leave to seek as many as five one-year extensions if needed.
At Cote's suggestion, they also recommended that Apple hold staggered negotiations with the publishers starting in two years, hopefully minimising the chance of future collusion, and removed previously proposed language that they said Apple had claimed would hurt its ability to run its popular App Store.
But in rejecting other changes that the company wanted and while expressing a desire not to "unnecessarily harm Apple," the governments said the Cupertino, California-based company's continuing refusal to admit it did anything wrong warranted tough medicine.
"Quite simply, Apple wants to continue business as usual, regardless of the anti-trust laws," the filing said. "This court should have no confidence that Apple on its own effectively can ensure that its illegal conduct will not be repeated. There must be significant oversight by someone not entrenched in Apple's culture of insensitivity to basic tenets of anti-trust law."
Letter and spirit of the law
In a separate court filing, Apple said the proposal for an external monitor "exceeds the bounds of even criminal price-fixing cases," and reflects an effort "to use this civil injunction to inflict punishment, which is impermissible".
The company said its own proposed remedies are stringent enough and enable it to remain "one of the world's most innovative companies, while acting consistently with both the letter and spirit of the anti-trust laws".
The five publishers, all of which have settled with regulators, include Lagardere SCA's Hachette Book Group, News Corp's HarperCollins Publishers, Penguin Random House, CBS's Simon & Schuster, and Verlagsgruppe Georg von Holtzbrinck GmbH's Macmillan.
Cote has scheduled a May 2014 trial to determine damages, which could total hundreds of millions of dollars.
She had ordered both sides to hold talks to resolve their differences over an injunction, but the talks failed. The government said some of Apple's proposals were even less restrictive than what the publishers had accepted.
Gina Talamona, a Justice Department spokeswoman, was not immediately available for comment. Tom Neumayr, an Apple spokesman, was not immediately available for comment.
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