Amazon Anticompetitive Agreements and E-Book Prices Class Action

According to one source, Amazon.com, Inc. accounts for more than 75% of the e-books sold in the US as of September 2020. The complaint in this antitrust class action alleges that Amazon has used its dominant position to restrain price competition in the “trade book” digital book market. Trade books include fiction and nonfiction for a general audience.

The class for this action is all persons who, since January 18, 2017, bought in the US one or more e-books of the Big Five publishers through any retail outlet in the US other than Amazon.

The other major force in the trade book business are the “Big Five,” the publishers of these books. These include Hachette Book Group, Inc., HarperCollins Publishers, LLC, Macmillan Publishing Group, LLC, Simon & Schuster, Inc. and Simon & Schuster Digital Sales, Inc., and Penguin Random House, LLC. The complaint calls them co-conspirators with Amazon, although they are not defendants in this case.

When the Big Five sell their books via platforms like Amazon and Barnes & Noble, they operate under the “agency model.” Transactions are considered dealings between publisher and consumer; the online outlet is merely a sales agent, earning commissions on the sales.

Amazon was investigated for possible collusion with the Big Five by a number of parties, beginning in 2011. The District Court and the EU Commission found that they had conspired to raise prices. The Big Five had agreed to give Apple a “most favored nation” (MFN) clause, they said.

The Big Five were required to stop colluding, to stop using MFNs with retailers for five years, and to allow retailers to create their own discounts for two years. Prices went down significantly during that time, but they went up again in 2015 after the Big Five signed new agreements with Amazon. The increases were anywhere from 11% to 30%, depending on the publisher. The Big Five also increased prices on new books and offered fewer price ranges.

The complaint claims that the Big Five also agreed to price constraints that kept outlets other than Amazon from selling books more cheaply.

After that, further European and American investigations found that MFNs in agreements were still harming competition and keeping other sales outlets from competing freely.

E-books lower costs in the areas of printing and distribution, but the complaint claims that consumers are not benefitting enough. Further, it says that Amazon has found ways to tie its distribution and discovery tools to its advertising services. This makes it hard for readers to discover books unless the publisher buys advertising services from Amazon.

MFNs are also still in use, the complaint alleges, to offer better terms to Amazon than to other sales outlets. This and other agreements keep competitors from offering consumers better prices.

Article Type: Lawsuit
Topic: Antitrust
Tags: Antitrust, Collusion and Price Fixing, Requiring Consumer to Pay Higher Prices