A New Chapter in Antitrust Law: The Second Circuit's Decision in United States v. Apple Determines Hub-and-Spoke Conspiracy Per Se Illegal

Abstract

On June 30, 2015, in United States v. Apple, Inc., the U.S. Court of Appeals for the Second Circuit held that Apple’s agreements with five publishing companies violated the Sherman Act. With Apple as a retailer and the publishers as manufacturers, the agreements between the two groups were vertical. This classification is significant because in 2007 in Leegin Creative Leather Products v. PSKS, Inc., the Supreme Court held that all vertical agreements should be analyzed under the rule of reason. Rather than looking at the structure of the agreements, however, the Second Circuit focused on the type of market restraint that the agreements imposed. Because the vertical agreements facilitated a horizontal conspiracy to raise and set ebook prices, the court reasoned that the agreements were per se illegal. This Comment argues that the Second Circuit erred in finding that the agreements were per se illegal. By ignoring the rule of reason analysis, the Second Circuit’s holding prevented Apple from demonstrating the procompetitive justifications for its agreements.