A federal judge has rejected Apple's and Amazon's motions to wholly dismiss a consumer antitrust lawsuit, one that accuses the tech giants of colluding to eliminate all but the highest-price Apple products in Amazon's online store.
Writing in Seattle (PDF), Judge John C. Coughenour noted that Apple and Amazon do not dispute the existence of their agreement, which was publicly touted by the companies in November 2018. Nor do they argue that it had an "effect on interstate commerce," as required by a lawsuit making a complaint under the Sherman Act. The issues pushed in the defendants' motion for dismissal is whether the Global Tenets Agreement (GTA) signed by the companies has an impact on "a relevant market" and whether it "imposes an unreasonable restraint of trade."
Coughenour dismissed one aspect of the plaintiff's lawsuit. He disagreed with Apple's and Amazon's positioning of themselves as competing to sell Apple products "at a horizontal level." Instead, they are, under their GTA, "vertically situated" as a manufacturer and distributor. But, given the "complex nature of the business relationships between the parties," Coughenour wrote, and the fact that the plaintiffs agree that not all resellers of Apple products were removed from Amazon's marketplace, a "per se" finding of antitrust violation could not be sustained.
But the case can go forward, Coughenour wrote. What the specific market is for Apple products on Amazon, and the GTA's impact on it, that "is a question reserved for a jury." The judge cites F.T.C v. Whole Foods Mkt. (the latter of which is owned by Amazon) in dismissing Apple's claims that the plaintiffs have not defined a specific enough market for iPhones and iPads, which can be bought in many places. "The fact that a customer might buy a stick of gum at a supermarket or at a convenience store does not mean there is no definable groceries market," a DC federal court wrote in 2008.
The original complaint, filed by Seattle law firm Hagens Berman on behalf of Pennsylvania resident Steven Floyd and a wider class, suggests that Apple and Amazon's agreement, originally framed as a way of removing counterfeit or low-quality Apple products from the store, denies customers competitive pricing on iPhones and iPads. The suit claimed that the agreement essentially killed the market for refurbished Apple goods on Amazon while giving Amazon a discount of up to 10 percent on its own sales of Apple goods. The suit notably claimed that there were more than 600 vendors of Apple goods on Amazon in early 2018 but only seven by mid-2019.
Hagens Berman has seen Apple in court many times before. The firm has sued Apple over scratched iPad nano cases, e-book price-fixing, App Store developer rules, and iOS touchscreen patents, the last of which involved Apple's accusing Hagens Berman of relying on an undisclosed attorney for help with their suit.
[Update, 4:45 p.m. ET: "This means the lawsuit is completely intact under one of the claims, and these two tech giants will have to answer for over-pricing of iPads and iPhones," said Steve Berman, managing partner at Hagens Berman, in a statement to Ars Technica. Amazon declined to comment on this matter. We reached out to Apple, and will update this post if we hear back.]