Amazon.com, Inc. was hit with a nationwide class action lawsuit Thursday in the District Court for the Southern District of New York alleging collusion and illegal price-fixing of e-books with some publishers. The plaintiffs are represented by law firm Hagens Berman that brought a similar case against Apple Inc. in 2011 and is a frequent whistleblower on e-book price-fixing.
According to the complaint, Amazon is presently the largest retail e-book seller in the US, with almost 90 percent of all e-books being sold through its platform. It alleges that Amazon has entered into price-fixing agreements for e-books with the “Big Five.” These are the five largest publishers in the country, namely the Hachette Book Group, HarperCollins Publishers LLC, Macmillan Publishing Group LLC, Penguin Random House LLC and Simon & Schuster. Collectively, they account for 80 percent of the trade books (general interest fiction and non-fiction books) sold in the US.
The agreements are reported to contain provisions for business model parity, selection parity, agency price parity, and promotion price parity, due to which publishers are required to offer Amazon the same material terms and conditions for e-book distribution, provide it with the same variety of content at the earliest date available to other e-book retailers, set a price for sale no higher than that for other platforms, and provide it with any promotions that are being offered to other platforms.
Allegedly, Amazon also charges high prices for commission and advertising that leads to publishers selling e-books at higher prices and consumers not receiving the benefits of cost reduction from low printing and distribution expenses of the e-book market.
Further, consumers purchasing from other platforms are forced to pay higher prices and innovation in the market is being stifled. There is also less incentive for competitors to invest in developing alternative models that may otherwise have challenged Amazon’s monopoly over e-book distribution.
The complaint alleges that Amazon’s conduct causes “an unreasonable restraint of trade” and is an abuse of monopoly power under section 2 of the Sherman Antitrust Act. Further, the price-fixing conspiracy by Amazon and the Big Five violates section 1 of the Sherman Act.
The plaintiffs seek damages and injunctive relief under the Clayton Act on behalf of the class of “all persons who, on or after January 14, 2017, purchased in the United States one or more eBooks sold by the Big Five Publishers through any other retail e-commerce channel in the United States other than the Amazon.com platform.”
