From the American Booksellers Association:
This week, the American Booksellers Association launched a national advocacy campaign with letters urging the U.S. Congress, the 50 state attorneys general, and the 50 state governors to investigate Amazon for violations of antitrust laws.
In the letters, ABA CEO Oren Teicher wrote that the association strongly believes that “Amazon’s abuse of its dominance and its growing monopolization have had a negative impact on free expression and the health of America’s book industry, including a chilling effect on the diversity of, and access to, books and information.”
In conjunction with the antitrust campaign, ABA launched its Antitrust Action Kit, which provides booksellers with state-specific letters that they can adapt and send to both their state and federal lawmakers as well as other key officials.
“We strongly encourage booksellers to use the templates in the Action Kit to reach out to their federal and state lawmakers, as well as their attorney general and governor,” said Teicher. “Antitrust laws exist to protect consumers, their communities, and small businesses from the very business practices now being employed by Amazon.”
. . . .
Teicher also pointed out that Amazon’s business model is very similar to the A&P grocery store chain’s business model prior to 1949, when the U.S. Court of Appeals ruled that A&P violated antitrust laws. “Like A&P,” he wrote, “Amazon is not keeping prices artificially high. Indeed, it is keeping prices artificially low, and extending its reach into production and distribution. This spurs further growth for Amazon, while forcing smaller competitors to do business with it even as it simultaneously competes against them. In the process, Amazon has garnered great influence among policymakers in states and in the federal government, garnering tax subsidies that only increase its market advantage at the cost of tax revenue and millions of jobs.”
Link to the rest at the American Booksellers Association
PG is continually amazed at all the instant experts on antitrust law that keep popping up in the book business these days.
The most common antitrust case they cite is Standard Oil Co. of New Jersey v. United States, decided in 1911. PG notes that, while Standard Oil still stands for some antitrust principles, it hasn’t been 1911 for a long time and the competitive world has changed a bit since then.
Amazon’s supposed sin is “predatory pricing,” known in some circles as low prices, great prices, wonderful prices, affordable prices, etc.
Here’s the theory about how predatory pricing is supposed to work and why it is dangerous:
- Big Bad Company lowers prices.
- Competitors wither and die.
- After finishing off competitors, Big Bad Company raises prices to ruinous levels.
Bullet Points 1. and 2. simply describe free market capitalism as practiced in many parts of the world.
Bullet Point 3. – raising prices to high levels after putting competitors out of business hasn’t happened, at least in the modern US.
If any company was in a position to jack up prices in recent times, it would have been Walmart which, in many small towns, became the only grocery store, the only clothing store, the only book store, etc., after local competitors selling those products did go out of business. Did Walmart raise prices? Nope. Everyday low prices.
Sam Walton understood there was always some mini Sam Walton lurking around waiting to underprice Walmart if Walmart raised its prices. And people would travel further for low prices in 1990 than they would in 1911.
Plus Sam Walton had good lawyers who told him that if he did raise prices under these circumstances, he would check the box for Bullet Point 3 and be guilty of predatory pricing.
Twentieth century antitrust law was often based on companies gaining monopoly power in one or more geographic areas. With poor transportation options or goods too bulky to ship very far, a competitor one hundred miles distant might still be shut out of a geographical market because customers wouldn’t travel that far to purchase goods.
Of course, Amazon lives on the web where, in most of the world, geography doesn’t matter. PG could set up an ebook store today that competed with Amazon on book prices (for a limited selection of ebooks). Baen, which is way smaller than Amazon, has an ebook store for its own books and offers some products Amazon can’t.
Amazon even enables hundreds of used book stores to directly compete with it on price by including used book listings beside Amazon’s new book listings. PG has no inside information, but he bets that Amazon loses a significant number of new hardcopy book sales to used book stores.
Abe Books looks to be well-positioned to compete in in this market should Amazon ever decide to shut out used book stores.
PG says there is nothing noble about the efforts of the ABA or Authors United or any of the other whiners who are trying to prevent Amazon from selling books at low prices. They have no interest in defending the great principles of antitrust law. They are simply trying to use government agencies to protect their right to sell expensive books. This crusade provides no public good and is entirely self-serving.
The future of books is here and there’s not much room for expensive middlepersons.