Published: Mon, May 13, 2019
Markets | By Otis Pena

Supreme Court allows consumers antitrust suit against Apple

Robert Pepper and three other iPhone users filed an antitrust complaint in 2011 claiming Apple created an unfair monopoly over the "iPhone apps aftermarket" and drove up phone prices by blocking third-party apps. The iPhone giant said it only acted as the intermediary, providing a storefront where consumers found and purchased the apps they later installed on their phones. The group of plaintiffs argued that developers priced their apps higher than they otherwise would to account for Apple's commission.

The court's decision did not make any ruling on the merits of the case.

Conservative Justice Brett Kavanaugh, an appointee of President Donald Trump, joined the court's four liberal justices to rule against Apple and wrote the decision.

Apple argues that consumers shouldn't be able to sue, citing an earlier ruling, which argues that "indirect purchasers" can't sue a company for antitrust damages.

Noting that they pay Apple - not an app developer - whenever buying an app from the App Store, the iPhone users who brought the case said they were direct victims of the overcharges. The case, Apple v. Pepper, was actually dismissed in 2013 by a California court, but the Court of Appeals for the Ninth Circuit allowed it to return in 2017.

The court has not declared Apple monopolists yet, but this ruling does allow the case to proceed.

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"Apple's theory would provide a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement", Kavanaugh wrote.

We have reached out to Apple for comment and will update this story with any response.

The dispute hinged in part on how the justices would apply a decision the court made in 1977 to the claims against Apple. He also addressed Apple's claim that they do not set app prices by pointing out that the company's practice of charging app developers $99 per year plus 30 percent of sales indeed affects pricing.

IPhone users filed the suit.

When an application is purchased, Apple collects a 30 percent commission and gives the other 70 percent to the developer.

By a 5-4 margin, the high court chose to uphold a lower court's decision to permit a lawsuit by consumers to go forward.

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