Judge Finds Revived Amazon E-book Monopoly Suit Should Proceed

From Publishers Weekly:

For a second time in two years, a magistrate judge in New York has recommended that a consumer class action lawsuit accusing the Big Five publishers of colluding with Amazon to fix e-book prices should be dismissed. But while the judge recommended tossing the case against the publishers, the court found that monopolization and attempted monopolization claims against Amazon should proceed.

In a 59-page report, magistrate judge Valerie Figueredo found sufficient facts at the pleading stage to “plausibly allege that Amazon’s conduct has allowed it to charge supracompetitive commission fees, leading to reduced competition in the e-book platforms-transaction market and higher e-book prices for consumers.”

The case was first filed in the Southern District of New York on January 14, 2021, led by Hagens Berman (which was also the firm that sued Apple and five major publishers for colluding to fix e-book prices in 2011). It alleged that the Big Five publishers—Hachette Book Group, HarperCollins, Macmillan, Penguin Random House, and Simon & Schuster—were co-conspirators in a hub-and-spoke scheme with Amazon to suppress retail price competition and keep e-book prices artificially high. In March 2021, a second, associated suit accusing Amazon and the Big Five publishers of a conspiracy to restrain price competition in the retail and online print trade book markets was also filed.

But last year, after a marathon July 27, 2022 hearing, Figueredo recommended that the presiding judge in the case, Gregory Woods, toss both cases for lack of evidence. In two brief September 29, 2022 orders, Woods accepted Figeuredo’s “well-reasoned” and thorough reports, and dismissed the cases without prejudice, giving the plaintiffs a chance to file amended complaints.

Which they did. In a 125-page Second Consolidated Amended complaint filed last November, Hagens Berman revised and refiled their claims, including arguments that Amazon’s dominance in the e-book market enables it to “coerce” e-book publishers into “entering into contractual provisions that foreclose competition on price or product availability,” which ultimately harms consumers by keeping e-book prices artificially high. “In a but-for competitive market, Amazon could not earn such a supracompetitive profit without price or product availability,” which ultimately harms consumers by keeping e-book prices artificially high. “In a but-for competitive market, Amazon could not earn such a supracompetitive profit without losing sales to a competitor and experiencing reduced profits,” the amended complaint argues. “Yet Amazon has been able to both maintain its market share and extract its supracompetitive transaction fees by exercising its market power to block competition.”

In its defense, Amazon insists that its MFNs and other contract terms are standard and “not inherently anticompetitive,” and that there is no evidence the company’s conduct “had the effect of raising agency commissions to anticompetitive levels.” But that’s not a question to be resolved at the pleading stage, Figueredo noted, concluding that the plaintiffs “have adequately pled anticompetitive conduct to support their monopolization and attempted monopolization claims.”

Link to the rest at Publishers Weekly