Another Antitrust Lawsuit: Amazon Faces Allegations of Price-Fixing eBooks
Written by AskTheLawyers.com™
In a quickly growing collection of antitrust lawsuits, Amazon is now facing allegations of anticompetitive behavior by colluding with the country’s top five publishers to establish price restraints so that eBook purchasers are comparatively overcharged on any other purchasing site.
Amazon is the biggest retail eBooks seller in the United States.
According to the 66-page official complaint, 90% of all eBooks are sold through Amazon’s online platform, including eBooks from the five largest publishers in the U.S. This collection of publishers—referred to in the lawsuit as the “Big Five”—include Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster. The Big Five’s books account for approximately 80% of all non-academic books sold in the U.S. Between the Big Five and Amazon, it’s indisputable that these companies have a lot of power over the literary market in the U.S.
Plaintiffs allege that anyone who purchased an eBook from the Big Five anywhere other than Amazon overpaid.
Due to the alleged price-fixing agreement between the Big Five and Amazon, when these publishers increased their prices by up to 30%, Amazon was not likewise affected. This price restraint agreement would not only give Amazon an unfair advantage in book sales over every other retailer whose eBooks were being sold at the new inflated rate, but it would also result in consumers overpaying for eBooks purchased anywhere else.
As the official complaint puts it, “... the Big Five agree not to sell their eBooks at a price lower than the price they sell on Amazon.com. This contractual “stranglehold” prevents Amazon’s current eBook retail competitors from expanding their market share and reduces the incentive of potential eBook retail competitors from entering the market.” This tactic for eliminating price competition is referred to as “pricing parity” and violates the anticompetitive business laws which govern trade in the U.S.
Federal trade laws as established in the Sherman Act prohibit anti-competitive and monopolistic behavior.
The Sherman Antitrust Act of 1890 is designed to ensure free competition between businesses in the commerce industry and does not allow for the existence of or attempt to create a monopoly. The allegations in this lawsuit center around the idea that the price-restraint agreement between Amazon and the Big Five constitutes a violation of the antitrust laws designed to protect the free market and creates a monopoly in which the climate of commerce is unable to support competition between other booksellers.
The plaintiffs in this lawsuit are filing on behalf of all other eBook purchasers similarly situated.
For the purposes of this lawsuit, the class of plaintiffs includes anyone who purchased a Big Five eBook from a retailer other than Amazon. The plaintiffs are seeking a jury trial to assess the issue, and they are seeking an adjudication to confirm that the conduct of Amazon and the Big Five constitutes a violation of the Sherman Act and illegal monopolization, a reimbursement to purchasers of eBooks sold elsewhere than Amazon, and any additional damages deemed appropriate by the court.