Supreme Court weighs dispute over antitrust laws on Apple's App Store

WASHINGTON (Reuters) – On Monday, US Supreme Court judges will take over from Apple Inc. (AAPL.O) to try to bury a lawsuit seeking damages from the company for allegedly monopolizing the market for iPhone software applications and forcing consumers to overpay.

Judges will hear the arguments of Apple's appeal regarding the lower court's decision to revive the proposed class action by a group of iPhone users. The lawsuit accused the Californian technology company of Cupertino, California, of violating federal antitrust laws by requiring that applications be sold through the company's App Store, and then charged a 30% commission on purchases.

The case depends on how judges will apply one of its earlier decisions to claims against Apple. This 1977 decision limited the damages for anti-competitive behavior to those directly overloaded rather than to the indirect victims who paid a surcharge charged by others.

IPhone users, including the main plaintiff, Robert Pepper, of Chicago, filed a lawsuit in a California federal court in 2011, saying Apple's monopoly was driving price-inflated prices if applications were available from other sources.

Although developers set prices for their apps, Apple collects payments from iPhone users, retaining a 30% commission on every purchase. One of the contentious points in this case is whether the application developers recover the cost of this commission by passing it on to consumers. Developers earned more than $ 26 billion in 2017, an increase of 30% over 2016, according to Apple.

The company, backed by the administration of Republican President Donald Trump as well as by the US Chamber of Commerce, told court judges that if iPhone users had sued, this would threaten the burgeoning e-commerce sector, which generates hundreds of billions of dollars a year in US retail sales.

The complainants, as well as antitrust watch groups, have said closing the courthouse doors to those who purchase finished products would undermine antitrust enforcement and allow monopolistic behavior to develop unchecked. The plaintiffs were supported by 30 state attorneys general, including Texas, California and New York.

The plaintiffs said that the app developers would have little chance of suing Apple, which controls the service where they earn money, leaving no one to challenge anticompetitive behavior.

The company requested the rejection of its antitrust claims, arguing that the plaintiffs did not have the legal capacity to initiate the proceedings. A federal judge in Oakland, Calif., Dismissed the complaint, saying consumers were not direct buyers because the developers had charged them higher fees.

But the US-based 9th Circuit Court of Appeals, based in San Francisco, relaunched the case last year, noting that Apple was a distributor that sold iPhone apps directly to consumers.