Bloomberg News

Apple Objects to Monitor’s Fees for E-Books Antitrust Compliance

November 29, 2013

Apple Inc. said a monitor appointed by a judge to oversee antitrust compliance in its electronic books price-fixing case is charging too much money.

“Of all known past Apple matters,” no lawyer has had a higher rate than Michael Bromwich’s proposed hourly fee of $1,100, the world’s most valuable technology company said in a Nov. 27 filing in federal court in Manhattan.

“Mr. Bromwich appears to be simply taking advantage of the fact that there is no competition here or, in his view, any ability on the part of Apple, the subject of his authority, to push back on his demands,” lawyers for Cupertino, California-based Apple said in the filing.

Bromwich, a former U.S. Justice Department inspector general, is charging a 15 percent administrative fee on top of his hourly rate, as well as on the cost of hiring other lawyers to assist him, according to the filing.

U.S. District Judge Denise Cote appointed Bromwich as a monitor in October following her July ruling that Apple played a “central” role in a conspiracy to fix prices for electronic books. Cote barred Apple from entering into anticompetitive contracts with e-book publishers.

Administrative Fee

Bromwich justified the administrative fee on the grounds that he’s handling the assignment through his consultancy, the Bromwich Group, rather than through his law firm, Goodwin Procter LLP, according to Apple’s filing.

The distinction “seems slippery at best” given that Goodwin Procter issued a press release “clearly meant to drum up more business” announcing Bromwich’s appointment as Apple’s antitrust monitor, Apple’s lawyers wrote.

Bromwich’s invoice for his first two weeks of work was $138,432, the equivalent of 75 percent of a federal judge’s annual salary, Apple said in its filing, which described the administrative surcharge as “unprecedented in Apple’s experience.”

Melissa Schwartz, a vice president of the Bromwich Group, said yesterday Bromwich was out of the country and unavailable for comment. She declined to comment on Apple’s claim.

The Justice Department’s press office didn’t immediately respond yesterday to a phone call seeking comment on the filing.

Apple also objected in its filing to proposals by Cote to allow Bromwich to interview company personnel without counsel present and to report to her without Apple lawyers present.

Those conditions “impermissibly expand the scope of the monitorship,” according to Apple’s filing.

The U.S. sued Apple and five book publishers in April 2012. After a trial that began in June, Cote ruled that Apple violated antitrust laws in its contracts with five of the six biggest book publishers. Apple is appealing.

The case is U.S. v. Apple Inc. (AAPL:US), 12-cv-02826, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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