Apple in court documents wrote that the government’s complaint over an alleged price fixing related to digital books is “fundamentally flawed”. Moreover, the company argued that competition had been non-existent prior to its entrance into the market because Amazon was imposing its wholesale model upon the industry and no party was willing to challenge it…

Reuters has the story:

“Apple’s entry into e-book distribution is classic procompetitive conduct” that created competition where none existed, Apple said in its court papers.

“For Apple to be subject to hindsight legal attack for a business strategy well-recognized as perfectly proper sends the wrong message to the market,” it added. “The government’s complaint against Apple is fundamentally flawed as a matter of fact and law.”

Apple’s executive Eddy Cue recently argued that the government doesn’t really understand the agency model, under which publishers are free to price their e-books on the iBookstore themselves while Apple gets to keep 30 percent of the proceeds.

Furthermore, Apple denied that the government “accurately characterized” the comment attributed to Jobs, who in an email exchange wrote that Apple and publishers should “create a real mainstream e-books market at $12.99 and $14.99”.

Amazon long favored wholesale model under which it exclusively sets prices of e-books sold on its store, with most of Kindle books costing up to $9.99.

Apple even wrote in court documents that its entrance into the digital books market fueled demand while forcing Amazon, Barnes & Noble and other proponents of wholesale model to create better e-reading hardware in order to remain competitive.

Apple recently said something along those lines, but this is the first time they’ve resorted to a pretty strong language in court documents pertaining to this case.

Greg Sandoval, writing for CNET, thinks Apple should settle because Amazon has outmaneuvered them in this case.

What do you think, is Apple putting its reputation on the line with this case?

Will their e-book agreement with publishers be portrayed anti-consumer, maybe even anti-competitive?