Apple filed an official complaint last week in U.S. District Court, alleging that the antitrust compliance monitor the court required Apple to hire to keep tabs on its dealings with book publishers is billing them excessively, over $138,000 for the past two weeks. The company also says he is making unreasonable requests outside of his mandated jurisdiction.
In July, Apple lost its case against the federal government over e-book price fixing in the iBookstore and was subsequently handed a punishment that was, at the time, considered fairly lenient. Apple is appealing the ruling.
The court restricted Apple from entering “unfavorable” agreements with book publishers for at least five years, said Apple’s iBookstore negotiations should be staggered, and assigned a compliance monitor to watch over the company’s dealings in order to protect against any future price-fixing.
Apple claims the monitor, former Department of Justice Inspector General and federal prosecutor Michael Bromwich, is charging a gratuitous fee, which Apple is required to pay, and is making “inappropriate” requests in the name of fact finding.
In the complaint, filed with the U.S. District Court for the Southern District of New York last week, Apple laid out what it says is Bromwich’s recent activities since he was assigned as a monitor in October.
Michael Bromwich is already operating in an unfettered and inappropriate manner, outside the scope of the Final Judgment, admittedly based on secret communications with the Court, and trampling Apple’s rights; the Court’s proposal out of the blue to grant him even greater powers as monitor would only make things worse. Since his appointment, Mr. Bromwich has run far afield from his mandate and informed Apple that his fee structure is designed to “generate profits” for himself and the law firm he has retained to make up for the antitrust experience he lacks.
An order from Judge Denise Cote hands additional power to Bromwich by allowing him to interview Apple executives and personnel without the presence of a lawyer.
Apple also asserted that it is unconstitutional for the company to be investigated by “an individual whose personal financial interest is for as broad and lengthy an investigation as possible.”
The bill for Bromwich’s first two weeks of work stands at $138,432.40, which will go to Bromwich and his four-member legal team. Bromwich has also failed to outline a budget, saying only that he needs to “generate profit.”
Bromwich says he has seen a “surprising and disappointing lack of cooperation” on the part of Apple. Bromwich sent a letter to the company’s board of directors, alleging Apple did not provide interviews, despite being requested in advance due to unavailability of its senior executives. Bromwich explained the meetings were needed to get a better understanding of the company’s compliance framework.
Bromwich also explained, in a letter to Apple’s lawyers, that his fees are acceptable, as his group is not a law firm. and thus does not practice law. He further said that in comparison to consulting firms, the rates are at the low end, and because he is an outside compliance monitor, the submission of a budget is not required.
