Publishers, Amazon Move to Dismiss Booksellers’ Antitrust Suit

From Publishers Weekly:

In separate motions this week, Amazon and the Big Five publishers asked a federal court to dismiss the latest iteration of a potential class-action price-fixing claim filed against them on behalf of indie booksellers.

According to court filings, the booksellers’ Amended Complaint, which was filed in July, accuses Amazon and the publishers of illegal price discrimination under the Robinson-Patman Act. But in their motions to dismiss, both Amazon and the publishers insist there is no illegal agreement to fix or otherwise restrain prices, and that the amended complaint is legally deficient and must be tossed.

“The Complaint recites that Amazon is a leading book retailer, takes issue with ordinary price competition, and tries to illogically and conclusorily claim that Publisher Defendants conspired with each other and with Amazon to confer a monopoly on Amazon, despite Publisher Defendants resisting Amazon’s growing position in the market for decades,” reads the publishers motion to dismiss. “This is simply not plausible. After realizing its originally pled Sherman Act conspiracy claims had no basis, Plaintiff tried to repackage them in its Complaint and bolster them with a price discrimination claim under the Robinson-Patman Act. The Complaint, however, is fatally deficient under either statute and must be dismissed.”

In its motion to dismiss, Amazon lawyers also insist that there is no conspiracy with the publishers, no evidence of illegal collusion, and that its bargaining for lower print book prices is simply good business—and good for consumers.

“Bargaining between buyers and sellers is one of the most commonplace, precompetitive actions that can occur in any market,” the Amazon brief states. “As the Supreme Court has stressed repeatedly, it would do great damage to competition and consumers alike if the [Robinson-Patman Act] were misconstrued as having outlawed competitive bargaining.”

The suit was first filed in March, 2021, when Evanston, Ill.-based Indie bookseller Bookends & Beginnings teamed up with the law firm currently leading a sprawling class action price-fixing suit against Amazon and the Big Five publishers in the e-book market to file an antitrust lawsuit on behalf of a potential class of booksellers accusing Amazon and the Big Five publishers (Hachette, HarperCollins, Macmillan, Simon & Schuster, and Penguin Random House) of a conspiracy to restrain price competition in the retail and online print trade book market.

Similar to the claims made in the in ongoing e-book price-fixing case, the initial complaint turned on Amazon’s use of Most Favored Nation clauses in its contracts with the Big Five publishers, which, lawyers for Hagens Berman claim, have “the intent and effect of controlling wholesale prices of print trade books and preventing competition with Amazon in the retail sale of print trade books.”

But in their motion to dismiss, Amazon lawyers note that the factual basis for much of the booksellers’ initial complaint—the use of MFN clauses—simply does not exist. And, Amazon lawyers insist, the price discrimination claims in the amended complaint are ill-conceived.

“The premise of Plaintiff’s Complaint was that [the use of MFN] clauses prevented other retailers from competing to ‘gain market share’ by negotiating better wholesale prices for themselves,” the Amazon motion notes. “Plaintiff withdrew its Complaint after Defendants demonstrated that there was no factual basis for Plaintiff’s core allegation: those agreements do not and never did contain any such MFN clauses. Rather than dismiss its claims, however, Plaintiff pivoted dramatically to allege effectively the opposite theory, that Amazon violated [The Robinson-Patman Act]…by negotiating for discounted wholesale prices and passing those savings along to consumers by charging ‘comparatively lower retail book prices’ to improve its market position…Plaintiffs new theory, in other words, attacks the very essence of robust and healthy competition that the antitrust laws overwhelmingly seek to promote. Plaintiff’s Amended Complaint is baseless and should be dismissed.”

Link to the rest at Publishers Weekly

6 thoughts on “Publishers, Amazon Move to Dismiss Booksellers’ Antitrust Suit”

  1. This lawsuit is an example of how Chicago School economics encourages thinking about the wrong target. In an extremely formalistic sense, and under an expansive interpretation of Twiqbal (setting the standards for when a suit should be dismissed), the complaint is probably legally defective; I don’t think that necessarily makes it legally insufficient and subject to dismissal, but that’s a separate inquiry. These motions are much more about controlling the conversation about the underlying policy issues than they are about the lawsuit, because the motions are themselves legally defective (but not necessarily in a way that requires denying them out of hand!).

    The complaint just isn’t defective in the way the OP, or Amazon, or the publishers, claim. Its legal defect is that it doesn’t include necessary parties to either the purported price-setting conspiracy or the factual context, parties who actually do have dominant market power over a properly defined market for at least eight of the thirteen publishing industries. One of those parties begins with the ninth letter of the English alphabet; the other is a conjunctive, the words of which begin with the second and twentieth letters of the English alphabets. That is, this is not properly a motion to dismiss under Fed. R. Civ. Proc. 12(b)(6), but instead a motion to dismiss for failure to join required parties under R. 19, and/or for judgment on the pleadings under R. 12(c), and/or for summary judgment under R. 56. But, for a variety of (primarily non-legal) reasons, joinder of all required parties is Not Going to Happen.

    And under prevailing law, there’s a decent chance it will be granted. (Whether prevailing law is “correct” is for another time, another forum, another few hundred footnotes in a law journal article that almost no one will read even if I ever get access to research law libraries again to finish it.) The ruling will not be the unconditional victory that anyone proclaims (especially not from this judge, for a variety of “inside baseball” reasons that do not reflect on the judge-as-a-person at all). The OP almost completely misconstrues the legal, the strategic, the public-posture, and the politicoeconomic nature of the respective motions, let alone their unstated agendas. Which should surprise no one.

    • Chicago supports a certain type of target. Those who support another haven’t come close to making a decent economic case.

      • Those who support another target of antitrust than the monomaniacal “immediate cost to consumer” tunnel vision of Chicago School economics have made an excellent economic case. What they haven’t done is made the political case in the US at any time they’ve had power to implement anything different, as the different emphases in Europe, Canada, and generally across academia make all too clear.

        And that’s all I’m going to say on this aspect of antitrust. It’s not an argument for this forum.

        • The political case rests on the economic. That’s why the political case has failed. Monomaniacal is is neither an economic nor a political argument

  2. These motions are much more about controlling the conversation about the underlying policy issues than they are about the lawsuit, because the motions are themselves legally defective (but not necessarily in a way that requires denying them out of hand!).

    So, something that should be handled by Congress and not the courts?

    • No, something that “should” be handled by bar disciplinary processes coming down like a ton of law journals on lawyers who misuse the courts. Courts are perfectly capable of dealing with this, but they can’t do so easily; the procedurally proper way is for the plaintiffs to file a motion to strike the motion to dismiss, meaning yet another round of briefing and more publicity for the defendants’ views (which is, of course, exactly what they want).

      Not gonna happen, and in some sense it’s the price of recognizing past errors involved in misuse of disciplinary systems to deter unpopular views… like the constant disciplinary complaints filed against the NAACP in the 1940s through 1960s for daring to use the courts, very publicly, to oppose discrimination.

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