Amazon.com and ‘Big Five’ publishers accused of ebook price-fixing

From The Guardian:

Amazon.com and the “Big Five” publishers – Penguin Random House, Hachette, HarperCollins, Macmillan and Simon & Schuster – have been accused of colluding to fix ebook prices, in a class action filed by the law firm that successfully sued Apple and the Big Five on the same charge 10 years ago.

The lawsuit, filed in district court in New York on Thursday by Seattle firm Hagens Berman, on behalf of consumers in several US states, names the retail giant as the sole defendant but labels the publishers “co-conspirators”. It alleges Amazon and the publishers use a clause known as “Most Favored Nations” (MFN) to keep ebook prices artificially high, by agreeing to price restraints that force consumers to pay more for ebooks purchased on retail platforms that are not Amazon.com.

The lawsuit claims that almost 90% of all ebooks sold in the US are sold on Amazon, in addition to over 50% of all print books. The suit alleges that ebook prices dropped in 2013 and 2014 after Apple and major publishers were successfully sued for conspiring to set ebook prices, but rose again after Amazon renegotiated their contracts in 2015.

“In violation of Section 1 of the Sherman Antitrust Act, Defendant and the Big Five Co-conspirators agreed to various anti-competitive MFNs and anti-competitive provisions that functioned the same as MFNs,” the complaint states. “Amazon’s agreement with its Co-conspirators is an unreasonable restraint of trade that prevents competitive pricing and causes Plaintiffs and other consumers to overpay when they purchase ebooks from the Big Five through an ebook retailer that competes with Amazon. That harm persists and will not abate unless Amazon and the Big Five are stopped.”

. . . .

Hagens Berman sued Apple and the Big Five publishers for fixing ebook prices in 2011, in a case that would eventually lead to suits from several US states and the Department of Justice, which accused Apple of colluding in order to break up Amazon.com’s dominance in the ebook market.

Link to the rest at The Guardian

3 thoughts on “Amazon.com and ‘Big Five’ publishers accused of ebook price-fixing”

  1. it’s from international diplomacy,”Most Favored Nation”, it means that if A is MFN for B then if B negotiates a deal with C that gives C better terms than what was negotiated with A, A automatically gets the better term.

    In the case of bookselling, it means that if you ever sell the book cheaper anywhere else, you have to lower the price on Amazon (and Amazon has bots out looking at the other bookstores, so if they ever spot your book at a lower price, they automatically drop the price)

    the major bookstores are so tied up with MFN contracts that it basically means that the book price must be the same everywhere. If it goes on sale one place, it would sell for the lower price everywhere

    I guess the logic of the lawsuit is that such contracts discourage any seller from selling at lower prices as they know all the other stores would drop to match

    • The lawsuit has…issues.
      Lots and lots of issues.

      For starters, the BPHs are the ones controlling the retail price of their ebooks, not Amazon. Amazon’s pricing preferences are overridden by the Agency model shich is what prevents price competition.

      Agency is by itself not illegal if negotiated independently and the DOJ, as part of the publishers’ settlement to collusion antitrust lawsuit, has been monitoring contract negotiations to ensure they are in fact independent.

      So among other silly things, the AG is claiming DOJ allowed a second conspiracy when they were supposed to be looking for one. Good luck with that.

      They are also claiming that a pricing scheme that has reduced the ebook market share and market power of the BPHs and massively grew the number of publishers bringing in lower-priced product is anticonsumer. Yeah, right.

      Before Agency 1.0 the BPHs controlled some 60% of Amazon ebook sales. At last public report, they were under a third under Agency 2.0. The lawsuit only makes sense in a narrowminded worldview where only the BPHs matter and you ignore the other two thirds of the trade book business.

      Absent any more smoking gun emails like in the Agency 1.0 conspiracy this is headed for summary dismissal.

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