At least, that’s how it’s supposed to work. But in the case of book publishers and Apple, people are tossing legal duties to the wind in the hopes that press leaks will shape a settlement.
For anyone who missed it, the case involves the Justice Department raking Apple and publishers over the coals for allegedly conspiring to raise the price of e-books.
Unlike in typical antitrust investigations, the public has already been treated to a steady parade of details.
The leaks began this spring when the case began spilling onto the pages of the Wall Street Journal as “sources” and “people close to the matter” passed on details about an impending lawsuit.
Then in late March, “two people close to the negotiations” told Reuters that talks were advancing and, last week, the WSJ started naming names — reporting that three of the publishers wanted to settle but that Apple and two other publishers wanted to stand their ground.
Some of the details refer to a deposition from a Barnes & Noble executive that, by law, is confidential.
It appears the sources are breaking their legal duties in the hopes of pressuring Apple and the holdouts into a settlement. But who are they?
There are only two realistic sources of the leaks.
One is the Justice Department itself where a departing chief appears determined to bag one more anti-trust scalp on her way out. In a recent interview with the WSJ, Sharis Pozen growled that she wouldn’t let competitors set prices — an unmistakable shot across the bow of Apple and the publishers. A series of leaks would only add to this leverage.
Michael Cader, the founder of respected publishing industry newsletter and website Publishers Lunch, noted last week that “many people in the industry believe Justice has been using the WSJ for a while now to press in public a case that they have yet to close in private or bring to the courts.”
The only other source of the leaks could be the publishers who have allegedly thrown in the towel already.
According to Andre Barlow, an antitrust expert and former Justice Department attorney, some companies prefer to simply settle rather than suffer the legal expenses and shareholder pressure that comes with an ongoing investigation. This can be the case whether or not they actually did something wrong.
“Some may just want to get this thing out of the way,” said Barlow, adding that the publishers don’t have the same deep pockets and stomach for a fight as their alleged co-conspirator, Apple. Barlow also says that parties are likely to turn to the press after internal persuasion has failed.
But what of those doing the leaking? Do they risk being punished?
“Are there penalties for leaking information that’s highly confidential? Yes. But in practical terms, it’s hard to uncover what happened,” said Barlow.
The investigation is still ongoing, as is a related class action suit. Any lawsuit or settlement with the Justice Department will produce a civil complaint that could strengthen the hand of the class action lawyers.
Publishers’ lawyers contacted for this story declined to comment on the record. A Justice Department spokesperson left a phone message but did not provide a statement on the Department’s policy on leaks.