In a ruling that could have massive implications for the electronic book industry, a federal judge has found Apple guilty of conspiring with publishers to fix the price of e-books, and has called for a trial to ascertain how much damages the Cupertino-based firm will have to pay.

US District Judge Denise L. Cote’s ruling in the trial rejected Apple’s argument that arrangements it had made with five book publishers were simply good business in a new marketplace:

“The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy.”

“Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010.”

The Department of Justice lawsuit pertained to allegations that Apple, whilst under the stewardship of the late Steve Jobs, conspired with publishers including Hatchett, HarperCollins, Macmillan, Penguin and Simon & Schuster in order to sell e-books more expensively than the traditional $9.99 price tag that Amazon set on its own books. The exact model that Apple roped the publishers into using is know as ‘agency pricing’, wherein publishers set the prices of their own e-books with retailers being given a specified percentage of each sale, as opposed to Amazon’s model, where retailers set the prices of their books.

There’s actually nothing illegal about agency pricing in itself, but in Apple’s case it fell foul of the law because of the way it colluded with five major publishers at once – something that’s deemed to be “anti-competitive”, and thus it was ruled illegal. Apple’s case probably wasn’t helped by its undoubted success in the e-books market. Previously, Amazon was market leader by some distance, but with the help of the publishers Apple was able to erode this lead somewhat.

Predictably though, the case isn’t over yet. Speaking to All Things D, Apple spokesperson Tom Neumayr said that the firm intends to appeal against the ruling:

“Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations. When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong and and we will appeal the judge’s decision.”

What This Means: Amazon Rules the Roost

The first reaction from ebook lovers might be to rejoice at the prospect of cheaper reading material now that Apple has been forced to alter the way it does business. This much seems certain, providing Apple doesn’t win its appeal. Amazon stated back in April 2012 that the DoJ’s decision to prosecute Apple that the case was “a big win for Kindle owners,” and would result in it “being allowed to lower prices on more Kindle books.”

But while cheaper books are welcomed, the ruling seems to have left Amazon in an extremely dominant position, and that could lead to unforeseen problems. Indeed, the publishers themselves claim that this is a situation they were trying to avoid. Back in April 2012, Macmillan CEO John Sargent justified his decision to ‘collude’ with Apple as being good for competition:

“When Macmillan changed to the agency model we did so knowing we would make less money on our e book business. We made the change to support an open and competitive market for the future, and it worked.”

Whilst probably an unintended consequence, the ruling plays right into Amazon’s hands. We might be paying a little less for our ebooks in future, but we could end up paying a far higher price if Amazon ends up with a monopoly on the ebook selling industry, ensconced in a position where it has the final say on what gets sold and what doesn’t. Is it really worth threatening the existence of the publishers who actually bring us our books, just to save a few dollars? Or would we prefer to live with a vastly reduced but cheaper pool of reading material available?

More than a few authors have raised these concerns, chief among them Authors Guild president Scott Turow:

“The US “government may be on the verge of killing real competition in order to save the appearance of competition. This would be tragic for all of us who value books and the culture they support”.